Google and Youtube

Deals with Youtube and Google are flourishing today in the fertile ground of a 1.6 billion dollar aquistion of the online video leader* by the online money and search leader. The announcement is expected this afternoon or evening that Google’s bought Youtube for 1.6 billion. If Yahoo picks up Facebook (rumored but I think unlikely) it’ll signal an interesting consolidation of key Web 2.0 sites by the more established huge players. This consolidation seems to support the idea that the big guys see it as cheaper to wait until the rich and creamy high traffic sites rise to the top and then buy them up (Microsoft made an early and successful habit of doing that as well).

However at these billion+ valuations I’m skeptical the strategy can work as effectively as buying smaller companies to consolidate niche traffic. ie Flickr=good deal for Yahoo, Facebook=bad deal.

CORRECTION:  Really, Yahoo is the online Video leader, Myspace second and Youtube third.  Google video added to Youtube will probably push them to number one, but as usual Yahoo!’s doing it right but not getting credit for their leadership.

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