Newton's Laws Want fries with your YouTube?

Author: Tom Newton

You're in the Grille, it is 1 a.m. and your stomach is begging you to eat. The cashier impatiently and not so subtly taps her pencil. All the while you ponder: chips or fries with the Love Me Tender Wrap? Oh the pressure. Spend the extra 75 cents on fries or settle for the chips?

Dealing with these small economic decisions, it's hard for most of us Midd Kids to relate to the enormity of corporate investments. Sure, we throw down $45,000 a year to come and chill in the good old 802, but while on campus our economic decisions are limited to mostly small purchases. As such, when we hear that Google spent $1.65 billion to purchase YouTube, it is difficult to comprehend. After all, Google spent the equivalent of 330 million Love Me Tender wraps with fries. Now ≠that's a lot of cheddar.

We all know that YouTube is a website popular for its content of user-created music videos, movie trailers, TV shows and awesomely random videos ("Shoes", anyone?) but would you really trade 330 million Love Me Tenders just for the ownership of a company? You would have to be fairly sure that the company would give you an incredible return on your investment. So was Google wise in purchasing YouTube?

Many say no, mainly due to pending copyright infringement litigations. YouTube users are forbidden to upload videos that they do not have the rights to on the video upload screen, but as is apparent with the number of the site's pirated videos, not all abide. Google becomes liable for these violations, and as Google has a much bigger bank account than YouTube had by itself, the new YouTube will be a much larger target. It is even rumored that several hundred million dollars of the purchase price was set aside to cover lawsuits, of which several have cropped up since the purchase.

One example in particular illustrates just how much trouble Google could be in with YouTube. The case involved Daniela Cicarelli, a Brazilian model and the ex-wife of soccer star Ronaldo, who sued YouTube for a video posted on the site of her and her boyfriend having sex on a beach. The suit demanded $116,000 for every day that the video remained online. The case culminated with a court order that YouTube be shut down as long as the video was available to users. As it was a Brazilian court, however, the ruling did not have any standing in the US.

Google's investment in YouTube could be seen as a serious blunder, due to the legal issues of copyright infringement. But, in fact, their purchase of YouTube was a very savvy move on the part of their CEO, Dr. Eric Schmidt, as user created and supported sites are the current "in" model. Yes, Google will have to deal with more lawsuits, but the depth of their pockets should render those issues insubstantial. The revenues from advertising alone on YouTube will be more than enough to cover any damages incurred, and Google is sure to find new ways to squeeze profit out of the site. It's only a matter of time before Google will be willing to give up even more Love Me Tenders for the rights to Facebook.com.