Thursday, December 21, 2006

Some of what really went on behind the scenes for Google purchase of YouTube

Mark Cuban has a very interesting post (from ""anonymous author", who I respect and trust.") on what may have gone on behind the scenes when Google was buying out uTube.

It raises some interesting points:

...Yahoo was deep in the process as well.

...suitors kept stumbling over the potential enormous copyright infringement claims that were mounting

Youtube knew they had an issue and had offered a straight revenue share deal if the complainants would call off the dogs and give them time. The media companies quickly rejected this...

...obvious solution and that is to set aside a portion of the buyout offer to deal with copyright issues.

Nearly 500 million of the 1.65 billion purchase price is not being disbursed to shareholders but instead held in escrow.

...decision was made to negotiate settlements with some of the largest music and film companies.

Youtube approached the media companies with an open checkbook to buy peace. The media companies smelled a transaction...

...they didn't predict Google would pay such an exorbitant amount...

They negotiated about 50 million for each major media company to be paid from the Google buyout monies....

The media companies had their typical challenges. Specifically, how to get money from Youtube without being required to give any to the talent (musicians and actors)? companies would receive an equity position as an investor in Youtube which Google would buy from them. This shelters all the up front monies from any royalty demands.

...big G wants to make sure the Youtube purchase was a wise one. agreement to look the other way for the next 6 months or so while copyright infringement continues to flourish.

...pile some lawsuits on competitors to slow them down and lock in Youtube's position. As Google looked at it they bought a 6 month exclusive on widespread video copyright infringement. Universal obliged and sued two capable Youtube clones Bolt and Grouper.

.. puts enormous pressure on all the other video sites to clamp down on ..content posting ... it shuts off the flow of venture capital investments into video firms.

...Infringement lawsuits will be served on Youtube and the new proud parent Google in the coming months. Google will respond with two paths: an expensive legal fight or a quick and easy settlement with most choosing the latter.


Labels: , ,


Post a Comment

Subscribe to Post Comments [Atom]

<< Home