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Gut feeling: How Google CEO valued YouTube deal
Let the second-guessing, the mock horror, the disbelief, the crowing begin.
Google CEO Eric Schmidt has acknowledged he realized upfront that he was overpaying to acquire YouTube, to the tune of $1 billion, judged by any conventional measures.
The many critics of Google’s $1.65 billion deal to acquire the video-sharing site three years ago will claim this confirms everything they have always said about the deal. Not quite.
In fact, not really at all.
Schmidt came clean in a deposition by lawyers in the Viacom copyright lawsuit that there was very little revenue coming into YouTube to justify the price his company paid.
No surprises here. There were intangibles to consider:
1. YouTube’s popularity was sky-rocketing, making it the runaway market leader among video-sharing sites.
2. It was crushing his company’s own site, Google Video.
3. YouTube was up for auction and would be sold to a competitor unless Google jumped first.
4. Google overbid to ensure YouTube didn’t fall into rival hands.
Google’s real-time challenge
In its latest venture round last week, Twitter was valued at $1 billion. The Wall Street Journal calculated that $2.7 billion would be a fair value. Robert Scoble, an influential tech blogger — and habitual enthusiast – reckoned somewhere between $5 billion and $10 billion was justified. That’s for a company with no revenues and no known business model.
Has the world gone crazy again? Is Twitter just the latest manifestation of a new bubble of froth and hype? Perhaps. But the excitement does point to an arena where investors’ exuberance is justified: the growth of the real-time web.
Cashing in on the data you create
– Eric Auchard is a Reuters columnist. The opinions expressed are his own. –Â
By Eric Auchard
SAN FRANCISCO, Sept 17 (Reuters) – You created it. They make money off it.
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That’s the business strategy of popular Web sites, led by Facebook, which is just beginning to tap the value of its 300 million members, triple its base a year ago.
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The paradox of so-called “user-generated content” is that big companies such as Facebook and Twitter look to grow rich on information users share with one another.
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But some users are beginning to grow savvy to — and protective of — the value of the data they share about themselves. This has prompted Web players to make democratic noises about users owning their own information.
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The companies face a dilemma: they must find ways to sell advertising to support the cost of hosting their customers’ creative content without scaring off the users who make it all possible.
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Last week, Twitter, the Web-based short-messaging phenomenon, revised its terms of service to reassure members that they retain the rights to any messages they post on the site. The key change Twitter made is that now it has laid the groundwork to sell relevant advertising based on users’ messages, known as “tweets.”Â
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Such moves are putting the legal conditions in place to offer targeted advertising based on user behaviors and intentions as they can be deduced from the content they create or watch. Individual activities can be used by advertisers to identify potential audiences, which in aggregate, are served up specific marketing advertising.
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But it’s hard to see how existing forms of online advertising can be crammed alongside the rapid fire bursts of 140-character messages that Twitter users produce. Advertising experts say the company’s best hope lies in making corporate marketers pay to deliver marketing messages over Twitter. Some recent rule changes seem designed to enable such ads.Â
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Facebook got into hot water with its members earlier this year for adding two sentences to its terms of service that asserted ownership of messages, photos and other user content.
Twitter backlash foretold
Technology market research firm Gartner Inc has published the 2009 “Hype Cycle for Emerging Technologies,” its effort to chart out what’s hot or not at the cutting edge of hi-tech jargon. It’s just one of an annual phalanx of reports that handicap some 1,650 technologies or trends in 79 different categories for how likely the terms are to make it into mainstream corporate parlance.
Jackie Fenn, the report’s lead analyst and author of the 2008 book “Mastering the Hype Cycle,” delivers the main verdict:
#Twitter business math: Counting backward from billions
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$140,000,000 = Projected 2010 revenue in U.S. dollars according to Twitter February 2009 financial forecast leaked to TechCrunch. (*2)
100 million = Projected number of Twitter users in fourth quarter 2010 according to leaked spreadsheet. (*2)
from MediaFile:
Most teens find “tweeting” pointless — Morgan Stanley
Taking a break from flogging the latest tired media business model, Morgan Stanley published a short report on Friday entitled, "How Teenagers Consume Media" by 15-year-old summer intern Matthew Robson that offers a frank discussion of what young digital media consumers are up to. The FT has highlighted it on its front page, perhaps as an antidote to wall-to-wall coverage of the annual Sun Valley media moguls conference in recent days.
The most memorable moment in the report is its discussion of the irrelevancy of Twitter to teenagers:
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The Wall
