you tube

[welshwil]

if google have bought youtube for �800m how do they expect to get a return on that, as youtube is free, and advertising is nowhere near almost �1b

[kempie]

Google didn't actually pay anything for YouTube. The transaction was stock-for-stock, which means that Larry Page and Sergey Brin received $1.65 billion (~�850m) in Google shares.

[fo3nix]

Previously there was advertising, but google wasn't getting all the revenue on it because it didn't own it. Now that they do own the site, they can use their own systems more efficiently and thus make a bit more money out of it. Also you're vastly underestimating the value of adverts on video content. It's estimated by most to be far in excess of the value they paid for youtube. Maybe not right now, but in a few years.

Also, it wasn't about the money. They kind of had to do it. Youtube was a small company with little money, and had a lot of copyrighted stuff. Google video also has a lot of copyrighted stuff, but have more bulk behind them to defend themselves with.

The problem is if someone decides to sue youtube (pre-google buyout), and wins. This may have been quite likely, given the fact that they weren't all too rich and powerful. This case though could have been used in a case against Google, making it easier to sue them, regardless of their bulk. Thus by buying youtube, they buy more protection for themselves.