It would appear that Google paid a huge price for a small company that doesn’t make any money. It makes you wonder what’s going on here.
There were some hints that YouTube had technology for detecting copyrighted works coming out, but I’m sure that’s not worth $1.6B.
YouTube has a huge user base, but that’s because it’s the easiest to use right now, no guarantee of future performance.
Google purchasing YouTube doesn’t make any sense unless you compare it to the situation where a competitor purchased it. Google already has their own video product, but it’s not anywhere as easy to use as YouTube’s. Google is not paying $1.6B to get the extra video capacity, but to keep it out of the hands of Yahoo, Microsoft, and AOL. It probably would have been cheaper for Google if YouTube had gone bust and just disappeared, but they couldn’t take that chance as it became more apparent that someone was going to pony up some money for the users.