It was the story of the week. It wasn’t that long ago that financial investors were voicing their doubts that YouTube ( www.youtube.com ), a popular video posting and sharing website, could ever generate a profit. There was no business plan, they said. There was no way to generate profit, they said, short of attaching billboard ads and commercials to everything and charging users for content — a move that has meant certain death for companies in the past as users move elsewhere.
But they all forget about Google. Google attempted to launch its own video search and archive tool a year ago, but it never really got past the test beta version — unlike Yahoo’s very popular and very functional video search tool. It was the one way that Google was noticeably behind Yahoo; something that was missing.
Not anymore. Google announced plans to purchase YouTube last week for $1.65 billion in Google stock — not a bad windfall for a company that was launched in February 2005 by three now extremely wealthy former employees of PayPal.
Although it’s now under new ownership, there’s still the issue of exactly how YouTube will generate profits, but Google has proven to be a wizard over the years in generating revenue from things that nobody believed could make a profit.
Besides, the goal may not be to make YouTube pay off, although that’s certainly possible given the millions of people who access the site each day. More than likely the goal is to give people more reasons to use the Google search engine and other Google products, like e-mail, spreadsheets, word processing, Picasa photo sharing software, or any of the dozens of other Google products.
The only drawback for Google is the fact that YouTube is a sitting duck for copyright lawyers, as users regularly steal, post and sometimes edit snippets of video without the owners’ permission.
A lot of networks do allow their content to be posted — every time a snippet of The Daily Show makes it on YouTube, it only increases The Daily Show’s visibility and reputation for being funny — but it’s only a matter of time before someone decides to sue. The fact that Google’s deep pockets are now behind the site invites lawsuits for the simple reason that YouTube had nothing to sue for until a week ago. The liklihood that Google will try to profit from the service also opens the door a little wider for lawsuits — copyright infringement is always easier to prove when there’s financial gain for the infringer.