Google (GOOG) may never make money on its $1.65 billion purchase of YouTube. Selling advertising next to all of that low-resolution video of people beating their dogs and dancing drunk on their dining room tables is tough.
But, Google’s stock is down to $350, a drop from a 52-week high of $747, so investors are beginning to worry about the search company’s earnings prospects,
In an effort to get YouTube’s revenue on track, users will be allowed to download music from Apple (AAPL) iTunes or the Amazon (AMZN) music store. Watch the music video then buy the song.
The trouble is that consumers are already used to going to iTunes. The content there is neatly arranged and can be easily searched. Who wants to wander around YouTube for hours looking for music video and then moving to the Apple store to get the tunes?
Consumers will probably watch music videos at YouTube. They already do. They may pirate the songs, but they probably won’t buy them. Apple’s iTunes has that market locked up.
Douglas A. McIntyre