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August 21, 2006

business

Why Apple won’t buy YouTube

Posted Aug. 21, ’06, 12:31 PM PT by Cyrus Farivar
Category | Business

This morning, our good friends at GigaOm penned an article about why Steve Jobs should buy YouTube.

Here’s my take on this: it won’t happen. Check after the jump for why.

Robert Young writes:

As most know, with the exception of iTunes, Apple has been a laggard when it comes to the web. But buying YouTube, Steve Jobs could leapfrog to the top of the heap. After all, he would end up with immediate presence within the ranks of the top 50 web properties (one that’s still growing at a rapid clip).

While that may be true, Apple has never tried to compete online with anyone. The only successful online revenue stream that it has had is the iTMS, which is a sweet piece of software, but is basically a vehicle for selling iPods. Apple isn’t interested in the top 50 web properties.

YouTube would also, for the first time, give Apple a platform to tap into the highly-coveted stream of online ad revenues, particularly within the fast-growth, high-CPM video ad segment. And by owning a leading platform for user-created content, distribution, and social networking, Jobs could fill in nearly all of Apple’s strategic holes (vs. web competitors) in one fell swoop.

You know what YouTube’s current revenue stream is? Zero. Zilch. Nada. Again, Apple will only compete in things that it can make money on — hardware.

Enter YouTube. The online video phenom can be to the video iPod what iTunes was to the audio iPod. It’s not difficult to imagine mass consumers, especially tweens, downloading their playlists of YouTube “video snacks” and viewing them on the go with their video iPods.

Right. But I’d bet dollars to iPods that Apple releases a new iPod and a way to download movies and make it easier for people to upload stuff to the iTMS rather than go via YouTube. Again, selling iPods is how Apple makes its money. Ok, maybe iPod sales have slowed. Know why? Because they haven’t updated their product line since the fall. I’m certain that Apple releases a new iPod before Christmas 2006.

Jobs’ ego would benefit as well (not that he needs it). Just like Rupert Murdoch (via the “MySpace Effect”), such a deal would catapult Steve Jobs into the rarified stratosphere of being a “social media mogul.” Speaking of Murdoch & MySpace, a combination of YouTube and video iPod could also go a long way in staving off the increasing threat of MySpace Video.

Again, Jobs has done well for himself by innovating. They wouldn’t just consume YouTube whole hog and spit it back out exactly how it was. That’s not the Apple way. Apple didn’t come out with the first MP3 player, but it came out with the sexiest and best one.


5 Comments

Derik Author Profile Page said:

Right on all counts Cyrus. I think the strongest part of your argument is the lack of profitability. Apple has visibility in spades, which is all YouTube could really offer anyone.

YouTube also promotes a video content delivery mechanism (Flash) that would undercut their own (Quicktime).

Finally, YouTube's aesthetic is something Jobs would never go along with and radically changing YouTube's interface at this point in the game might seriously damage user interest.

Seriously, this (insert Web 2.0 company) + Apple = PROFIT! templating has to stop, at least until more thought is put into it.

August 21, 2006 1:35 PM
pos said:

Well said! Some people do have silly ideas now don't they!? Apple is all about identity and thinking different, not stringing along the lines of youtube or google video which already exist individually

August 21, 2006 1:38 PM
Myles said:

One more thing...

In addition to the iTMS, store.apple.com also makes money - lots of money.

August 21, 2006 4:46 PM
Luan said:

I don't like YouTube very much because their website looks ugly... YouTube is too ugly for Apple.

August 21, 2006 7:14 PM
Dan--the man said:

I see no reason why Apple would buy YouTube and then spend time and money to completely revamp it, which as said earlier could affect the user base, with Quicktime, and cloning all YouTube servers to Xserve servers of their own and much much more work.

If they wanted to get into this service at all, I could see Apple adding an option to iMovie when converting your project to a video file you can check "Upload video to iTMS" and another section to iTMS ('M' should now stand for 'Media') allowing people to view and download others' videos.

Eh, eh? How you like dem apples?!?!

P.s. Apple sure as crap wouldn't go browser-based.

August 21, 2006 8:37 PM

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