
Cheaper bandwidth or bust: How Google saved YouTube - smacktoward
http://arstechnica.com/gadgets/2015/04/cheaper-bandwidth-or-bust-how-google-saved-youtube/
======
adventured
I still remember the loud howls of mockery when Google paid $1.65 billion for
YouTube in 2006.

Mark Cuban said: "Only a moron would buy YouTube" (due to the potential legal
liability) and "There is a reason they haven't yet gone public, they haven't
sold. It's because they are going to be toasted" and "Would Google be crazy to
buy Youtube. No doubt about it. Moronic would be an understatement of a
lifetime."

[http://blogmaverick.com/2006/10/07/some-thoughts-on-
youtube-...](http://blogmaverick.com/2006/10/07/some-thoughts-on-youtube-and-
google/)

It was almost universally ridiculed as being far too expensive. Analysis was
done in every other article about how Google would never be able to pay for
the acquisition with YouTube as a business.

Eight years later, it's more than clear that YouTube was a steal for Google at
$1.65 billion. It's worth 10+ times that today.

~~~
NeutronBoy
> Eight years later, it's more than clear that YouTube was a steal for Google
> at $1.65 billion. It's worth 10+ times that today.

A 10x valuation still puts it at less than WhatsApp. If WhatsApp is worth
$19b, then I'd wager that Youtube should be worth significantly more.

EDIT: I'll expand with a few dot points

\- Youtube has an unimaginably huge content library

\- Youtube has a solid monetization strategy

\- Barrier to entry is significantly higher than a messaging app

\- Youtube is even more synonymous with video streaming than WhatsApp is with
messaging (anecdotally, my grandparents use Youtube. They don't even have
smartphones, let alone WhatsApp).

~~~
InclinedPlane
WhatsApp is _not_ worth $19 billion. That was a defense acquisition, not an
RoI based acquisition. Facebook was protecting themselves from losing $19
billion or more of business to WhatsApp or WhatsApp in the hands of a
competitor (like google).

~~~
jeromegv
A company is worth exactly what someone is willing to pay for it, nothing
less, nothing more. That's the best evaluation that exists.

~~~
JshWright
The motivation for thart valuation is still relevant though.

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anonbanker
The fact that Google buoyed Youtube's sinking boat by plugging the leaks with
money does not mean that Youtube shouldn't have collapsed under it's own
weight and been allowed to die. Maybe then, we would've gotten a free, open,
p2p alternative out of the ashes. Now we have DMCA takedowns, region-locked
videos, and unskippable commercials.

The sooner someone disrupts youtube, the better the world will be.

~~~
nick89
> _Maybe then, we would 've gotten a free, open, p2p alternative out of the
> ashes._

P2P is not the answer. It may work for the 1% (popular videos), but for the
99% it does not provide a viable alternative for on-demand content... I don't
want to wait 5 hours for a 3 year old how-to video to stream from a single
seed with limited upload capacity :(.

E.g. Look at torrents. Popular ones are readily available, but obscure or old
torrents will be lucky to have a single seed.

~~~
throwawaykf05
What percentage of the bandwidth is consumed by popular videos, and what
percentage by the long tail? P2P can alleviate a big chunk of the popular
content bandwidth. Not sure how much that is, though.

In a P2P world, if you're uploading a long tail video of your cat that only
your family will watch, maybe it's up to you to "seed that torrent" \- or more
realistically, keep your machine running so that your peer can serve the
content to theirs. It's the move from desktops to mobile and laptop devices
that run only sporadically that is the real problem for P2P.

------
ab
Pretty interesting stuff. I do wonder how much internal collaboration there is
on topics like HTML5 video & WebM. The benefits of owning end-to-end both
browser and server for driving media codec development seem enormous.

It makes Google's decision to launch Chrome in 2008 much more of an obvious
call.

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dba7dba
I had a coworker who used to work for a direct competitor of Youtube. He left
that competitor (as they were struggling) as Youtube was taking off. His older
company had been founded by a Hollywood exec/veteran, meaning he made sure to
keep out copyrighted material.

The way he put it, he said Youtube got big Because Youtube initially allowed
copyrighted material.

This led Youtube gaining more videos -> more traffic -> more videos -> repeat.

~~~
ZeroGravitas
Almost every day I watch something on Youtube that breaks copyright law and
think that society is better off as a result, so I think this is a positive
outcome. I wouldn't sacrifice all the old adverts, rare blues music etc. just
so that big corps can have a better bargaining position over their copyrights.

~~~
throwawaykf05
This sort of thinking only encourages more breaking of copyright law, the vast
majority of which is of content that is neither rare nor in danger of being
lost. I don't think society is better off for that, as it simply exacerbates
this specific freerider problem. "Big corps" (and small creators) are
investing their resources into providing content that you like? What are you
giving back in return?

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nullc
Seems a bit whitewashed by not making any mention of all the youtube internal
emails turned up in viacom's discovery with youtube staff participating in,
aiding the infringement (including, e.g. removing report functionality), and
saying the infringement was integral to the success of their business; But it
mentioned viacom's not-completely-clean hands. (Though there was nothing
unlawful about viacom uploading their own stuff to youtube...)

~~~
AceJohnny2
> (Though there was nothing unlawful about viacom uploading their own stuff to
> youtube...)

I dunno, sounds kinda like entrapment or framing to me...

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doctorshady
Defined saved; the site is still losing money.

