0.cached.png
By Newsweek Editors
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Forget your college economics class for a moment. In Silicon Valley's turbocharged business environment, recent rumors that search king Google might buy unprofitable online video site YouTube for $1.6 billion make a certain amount of nutty sense. YouTube has 35 million users a month and screens 100 million videos a day--from homemade movies of snuggling cats to "Daily Show" clips and music videos. Google currently has $10 billion in cash and is pushing to broaden its revenue base from boring text ads into banners and video commercials--which it could lucratively plaster across YouTube's expansive network of user-submitted video. "From Google's perspective, buying YouTube is a drop in the bucket and a risk worth taking," says RBC Capital analyst Jordan Rohan.
Google could also help solve YouTube's "Napster" problem. Much of the copyrighted material on YouTube is posted without the permission of TV networks and music studios. Google has existing relationships with many of those companies and the engineering muscle to figure out a way to screen YouTube for infringing content. Still, both firms decline to comment on the acquisition rumor, and Microsoft, Yahoo and Viacom have also spoken to execs of the 60-employee start-up over the past three months. So don't rush to visit GooTube.com just yet.
Read More on News
Submit Correction
View Editorial & AI Guidelines