Why Google bought YouTube (even though we all knew it wouldn't)

Okay, we didn't see this coming. We thought that if anyone bought YouTube, it'd be a content company looking for some young bucks to drag it into the future of video distribution. We had no idea a tech company like Google, which is still pimping its own video service, would double up (even though it did this with Urchin and Measure Map for web stats). What did we miss?

  • Google is loaded. The company is worth $131 billion on the stock market. As Reuters notes, it gained $4 billion in the last two days, enough to buy YouTube twice and then some. From a pure money standpoint, a YouTube failure would cost less than a bad week of trading.
  • Hey, someone had to buy YouTube. Despite co-founder Chad Hurley's insistence that YouTube wasn't for sale, this year the company talked to Microsoft, Yahoo, Viacom, and News Corp. (The New York Times cites this as evidence of Google's deal-making skills. It's more evidence that no one else is this crazy.)
  • Yes, did we mention Google is insane? Consider this seriously.
  • Google is about advertising. YouTube needs a business model. Thus, Google just found a massive distributor for its video ads, a market that Google Video didn't have room for.
  • All of this has happened before, and all of this will happen again: Google's YouTube buy is the new boom's answer to Yahoo's 2000 purchase of Broadcast.com for $5.7 billion. Remember when Internet radio was the future (even though TV had made radio the past, half a century ago)? Paying $1.65 billion for a company that loses over $2 million a month is just a more sensible manifestation of the bubble-acquisition archetype.

Earlier analysis: Win Google's money: Who can leave YouTube today a millionaire? [Valleywag]