Filed under: Analysis / Opinion, Video, Internet Tools, Apple
A media company seemingly lacking a business model? Maybe Apple should buy it...
...or not. Jan's post about the latest brewing business suggestion that Apple should buy YouTube betrays a strange trend in the news and blogosphere. Apparently, if a media-related company is either floundering or doing well but lacking a sure-fire business model, they're fresh meat for an Apple acquisition.Remember the rumors of Apple buying TiVo last year? TiVo's stock shot up 17 percent simply because the rumors started making their rounds. Now these rumors of Apple buying YouTube are fluttering about, and they simply don't make any sense in my book. Apple already has a ton of branding invested in the iTMS - including a very, very healthy video offering - and (as far as I know) they're the only major service which offers their own YouTube-like, grassroots media outlet: the Podcast directory. As Jan also mentioned yesterday, anyone can get a podcast listed in the iTMS, so they've already traveled down the road of offering a strong dose of user-generated content.
These claims of YouTube being a perfect buy sound a little far-fetched too - no one can figure out how they're making money (NYT even admits that in their third paragraph), and the company has never dropped even a hint to clear up the confusion. As far as everyone can tell right now, they're spending kagillions on bandwidth without much of a business model besides 'place one or two banner ads.' Let's not forget this is also digg's 'business model' at the moment, and that "Kevin made $60m" story from Business Week was thoroughly debunked as being nothing more than an estimate; they don't have a dime of that money in their pocket. In fact, they're allegedly barely breaking even - and they don't eat nearly as much bandwidth as the video-intensive YouTube.
Which leads me to the mortal question: how would YouTube show Apple the money? Could Apple charge $1.99, or even $.99, for that hilarious compilation of funny cats? My gut reaction is 'probably not,' though given the things people pay for these days, I could easily be wrong there. Nevertheless, I just don't see how acquiring what must be a money-pit of a company could benefit Apple, when they already have most of the tools and features in place to offer YouTube-like services and community on their own with the iTMS.
Time, of course, will tell on this one, but my money is on Jobs and co. saving their check book for a different rainy day. Just because a company is up a creek without a business model, doesn't mean Apple should be the one to toss them a paddle.
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Reader Comments (Page 1 of 1)
ronn said 11:31PM on 8-22-2006
I think once Apple has a true Video iPod and movie downloads from SEVERAL houses, it will offer the ability for users to upload their own videos. Probably similar to Podcasts when iTunes was updated with tools for podcasters.
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Keith said 11:33PM on 8-22-2006
I couldn't agree more. Why would anyone think a company which has such a great video distribution system in place that is fully intergrated with the top selling portable player buy a company like YouTube?
Really nothing more can be said about it beyond all your great points except the rumor is following the Web 2.0 pattern. Build to sell.
Step 1: Create a site. Doesn't need to be an original idea.
Step 2: Find a way to build a "community"
Step 3: Start looking for a buyer.
Now if you'll excuse me I need to go start on that new blog, figure out a way to get it on TechCrunch, and plan my early retirement.
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Nathan said 11:52PM on 8-22-2006
YT is not a money-maker. The best bet for it to make money is to get an arrangement with DAP makers to allow users to download the video in the respective format (mp4, mov, etc.).
You can't sell the kind of stupidity that is on YT. Sure, some of it is actually good, but paying for a YT video is like paying for a podcast, and I'm not sure how many people would do that.
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jbelkin said 12:27AM on 8-23-2006
You're right in the main analysis. The main thing is Apple does NOT need YouTube. Any company wanting YouTube is an OLD LINE company like FOX (with MySpace) or any of the Tv networks or a newspaper chain that needs the cachet of being hip, young & cool. Three attributes Apple is not lacking in.
Apple could have a YouTube competitor up & running in 2 days ... and looking classy - even for vomiting cats videos. But why?
That's problem #2 - to be perfectly blunt - 90% of YouTube is a copyright violation by the letter of the law even for "original" videos (no un-original music, tv show playing in the background, etc, etc) ... only an "underground" company with no real means of income can get away with it. How fast from the time GE UNIVERSAL buys YouTube before the first copyright lawsuit is filed?
So like places like GeoCities, MySpace, etc ... and that other video site that dumped all the R & X rated files - that once they merge/join a huge conglomerate, the lawyers take over - out goes everything non-standard ... End of YouTube ...
You would be essentially buying a concept - in Apple's case they could launch a site in 2 days so why would they bother paying $500 million for servers & a web url?
(though YouTube apparently runs on Macs ...)
http://blackboardforum.com/you-tube-mac-lovers.php
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Stuart said 6:11AM on 8-23-2006
How many companies has Apple really bought over the years?
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Ed said 7:57AM on 8-23-2006
Quite a few ... many of the pro apps, plus iTunes originate from other companies that were bought. Probably others I'm not aware of.
The issue here is that YouTube is entirely against Apple's ethos. Apple is all about quality (at least outwardly), YouTube is all about copyright infringement and stupid home videos. They don't go together at all. Plus, they don't even use quicktime.
Sure, you can think of some good reasons why (as Jan outlines), but many better reasons why not.
I think they're more likely to get bought be some "faceless" organisation like News Corp or perhaps Microsoft/MSN?
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Marchelo said 10:05AM on 8-23-2006
How many companies has Apple really bought over the years? I want know this too.
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Stephen said 10:21AM on 8-23-2006
I think Apple should buy YouTube. I can visualise it becoming another part of iTunes with user gereated videos, and maybe tying this in with podcasts and more iPod downloads.
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Jon said 10:26AM on 8-23-2006
"I think they're more likely to get bought be some "faceless" organisation like News Corp or perhaps Microsoft/MSN?"
It's always sickening to watch MS trying to be young and hip. It's exactly the kind of thing that they'd do.
I really have no idea why the author chose Apple and YouTube though. YouTube competes with MySpace Videos to see who can have the worst and most tasteless home videos, so the question should be "Will News Corp buy YouTube?"
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Jim Gleeson said 12:00PM on 8-23-2006
It has been said that the existence of the iTunes music store is mainly to sell iPods. That being said: how could buying YouTube sell iPods? How does Youtube videos look on an iPod? Could Apple foot the bill for the bandwidth and still have a huge profit margin? Would Youtube then become iTube?
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Jon said 1:11PM on 8-23-2006
I think the only reason Apple would buy YouTube is if it became too much of a competitor, e.g. if the free music videos really took off. They'd probably just shut them down though - I can't really see them continuing to run it.
The iTunes music store works too seamlessly with the iPod for them to start offering videos on a web site.
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