GooTube?

TechCrunch today reports a rumor circulating in the VC community that Google is in talks to acquire YouTube for $1.6 billion. Regardless of whether or not this is true, the deal would make strategic sense for both parties.

YouTube suffers from The Three Curses Of Internet Success. These are success without revenue, success without profit and success without barriers to entry. As I said in that post:

"First mover or not, there is no substitute for a credible business plan that spells out a scalable business model that includes revenue and profit. Failing that, the plan should be for more of a proof-of-concept business model and to be acquired as an early exit strategy."

The problem is what I call Tribble Traffic:

"Tribble traffic is one root cause of The Three Curses of Internet Success...These Startups in Wonderland are becoming the experimental labs for established companies."

Google could use YouTube as the foundation for a searchable site for video content. As TechCrunch points out, the copyright issues that face YouTube are not new to Google and it is well equipped to deal with them.

Copyright © 2006 Philip Bookman

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