I can't help but comment on the recent acquisition of YouTube by Google, with all the news these days. I can't understand why Google's price hasn't dropped with the all paper deal. The market seems to have a lot of faith in Google's plan for YouTube (which is yet to be revealed).
I don't think that the price was worth it, because of the nature of the content on YouTube. If Google expects to insert the ads into the videos for revenue, I don't think they will realize the gains warranted by the price paid. With Google involved with YouTube, I can see lawsuits popping up for copyright issues, now that there are deeper pockets associated with it.
Is there something else up Google's sleeve? Datamining is a possibility, to refine their ad targeting, but it still draws upon the current population of surfers to click on ads, and having a video attached, I don't think this will increase their click-through rate. Advertisers may end up paying more for better targeting, but I don't think the effectiveness of the ad-targeting refinement expected, will increase the revenue for the advertisers.
With the robustness of the stock price, I hope I am wrong, for all you individual investors. The scenario of paying too much won't play out for a few months yet.
If Google makes this work, Yahoo and Microsoft will definitely face an uphill battle for on-line ad dollars with their products.
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