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Comment by habibur | Hacker News Reader

> Gustimated price tag would be $10-15m.

YouTube finally sold for $1b to google. And at that time everyone felt that was an unjustifiable price for a company that was burning millions per month on bandwidth and possibly will run out of cash any time.

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A bigger concern was that by the time of the acquisition it was clear that Google was buying a legal mess in the form of lawsuits that were spinning up from various Hollywood media companies. What wasn't clear (to many of us on the outside, at least) was that Google was prepared to deal with that and not go broke doing so.

I'm basing this on nothing, but at the time I thought Google figured that if Youtube lost the lawsuits it would destroy the video market for everyone, so they bought them with the intention of defending the lawsuits better than Youtube could have on their own.

Yes but the instant Google bought them they stopped burning millions on bandwidth, because even at that time Google had more latent fiber than anyone else. As I've said here dozens of times hardware has been the key to Google's success. Fiber in the ground is a big part of it.

YouTube had peering agreements in place even before the acquisition. And the instant the contract was signed, Google's fiber wasn't near YT's (then) five-six locations, so it was of little use. Actually, in November 2006 YT had a lot more (frontend) egress bandwidth than Google, whose dark fiber was mostly for its internal backbone. It took a couple of years before there was an unified CDN, at which point YT had already grown many times over.

And now it generates 15 billion per year.

Considering it’s de facto global video sharing platform the fact that it’s only 15 billion per year is surprising and makes me uneasy about equity valuation in general in tech space

Looks like it’s closer to 20B in 2020 but it’s also got a different type of competition now (tiktok, like a dozen first class streaming subscriptions & more lower tier options).

I'm confused about why this makes you uneasy. $15B/yr (Assuming profit) is really high.

Interest rates are nearly 0%, it's no surprise to see crazy multiples.

Google has invested a lot on its computing infrastructure (I guess ~20B per quarter nowadays?) and a large part of this should be attributed to YT given the heavy computational nature of video processing. I wouldn't be surprised if cumulative OpEx on YT is several tens of billions after the acquisition.

Isn't that 15 years later with a lot of effort and google's brand and muscle? I wonder how its remaining competitors like vimeo are doing.

I wonder what led up to that. If I were the YouTube founders at the time bleeding millions with no business model, I'd probably have taken the $10 million.

Talking about bandwidth, aren’t we talking anymore about how all those big services clog the pipes by delivering content that users want instead of small websites who deliver content that users want, and how this is unfair and how we should tax the hell of Youtube and Facebook and Netflix for being most of the bandwidth that is consumed?

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