Susan Mernit is blogging about the purchase that Google didn’t make: The New York Times. She makes some interesting points about why Google should have considered this option, but I think their non-purchase decision (so far) is the right one. Why? Two reasons: AdWords and market valuation.
To be fair, I think Susan makes my case on the AdWords point. She notes that “the NYTimes was one of the biggest consumers/placements for Google AdWords.” So if this customer is going to continue paying Google a fortune for AdWords, why buy them? I say be thrilled they're one of your top customers and treat them with the respect they deserve, period.
The market valuation point is equally important though. The NYT stock has been in steady decline since 2003. Given all the uncertainties and concerns surrounding the newspaper industry there’s a decent chance the stock price could drop even further. Besides, at today’s price, NYT has a market cap of more than $3 billion, which even Google might find to be rather rich.
Was Google smart to purchase YouTube? From a competitive standpoint, the answer probably is “yes.” Google certainly figured they would be better off with YouTube than if they let Yahoo buy them, for example. I’m not so much hung up on the potential copyright issues they’ll need to deal with, although they’re certainly significant, as I'm concerned about the brand and loyalty factors. Yes, many, many people are uploading videos to YouTube every day, but if something better comes along are they likely to switch? Absolutely. If my kids and their interests are any sort of leading indicator, MySpace’s popularity is dropping off. That’s one of the problems in this rapidly changing media landscape: Loyalties and a site’s “cool factor” can change almost overnight.