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Great take by Michael Urlocker on the Google-YouTube deal.
He arises some interesting questions:

Some of the questions Google and any other buyer of a mega-acqusition must ask itself:

• What is it about this merger target that consumers value and pay for?
• What are the special attributes of this business that advertisers value and pay for?
• Apart from the target being a “first mover” is there any sustainable competitive advantage it holds?
• Does this target allow us as a strategic buyer to unlock any new value in our other businesses?
• If we were paying real cash, would the same price seem valid and defensible to the owners of our business?

The most important point he makes is that YouTube is not worth $1.6 billions.

Is that worth $1.6 billion? No, because YouTube has no base of
paying customers. For all the hype of Web 2.0 and other nonsense, there
is no better indicator of a bad business than an absence of paying
customers.

As Peter Drucker wrote in 1973: “There is only one valid definition of business purpose: to create a customer.”

I agree with him, but in 1973 the concept of customer was pretty different from what we know now. A YouTube registered user and a YouTube visitor are true potential customers. In the Internet world, not always a customer pays, but makes others pay you.
It’s a matter of users monetizetion. And Google has many resources to do that. At best.

Technorati Tags: luca filigheddu, google, youtube, michael urlocker