Every big internet deal goes through five stages: rumor; shock; ridicule; curiosity; and envy. In eighteen months, other media companies will be envying Google for being willing and able to do the YouTube deal.
Last week everyone was buzzing about the rumor that Google was trying to buy YouTube with the added benefit of an accurate price. (Leaking the price is a way for a buyer to test the waters of their shareholders´ reaction to the deal) When the deal was announced we quickly moved into shock and ridicule as the reality of a $1.65 billion price tag for an eighteen month old company with no revenue and significant legal issues sunk in.
When the deal is done and the results start to come out, there will be a lot of curiosity about how it´s working. When it becomes clear that this is the next big engine of Google´s growth, there will be envy and regret for the other companies that didn´t step up and do the deal. Doubt it? This week I´ve heard the MySpace deal describe as cheap because they only paid $600 million for a company with no revenue. Just eighteen months ago, I had people claiming that the New York Times was crazy for paying $410 million for About.com. Today people are saying it was a great deal. MySpace and About.com are just farther down the road. YouTube provides Google with direct access to tens of millions of users and billions of page turns at a reasonable price. In addition, YouTube fits in with the Google philosophy of leveraging technology rather than people to fuel growth. Google is already dealing with the major media owners on content issues. They´ll now need to broaden the conversation.
The hardest task for any successful company is to keep compounding growth on top of big numbers. Google deserves our respect for taking bold steps to justify its shareholders confidence in the company´s future