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Rumour has it that Google might be close to snapping up the popular free video sharing web site, YouTube. This strikes LeeAnn Prescott, an analyst as highly unlikely, but deserves some analysis. Firstly, how does YouTube's traffic compare to Google Video, and what effect did Google's replacing the Froogle link with Google Video have? The question came amid a swirl of blog and media stories that Google is negotiating to buy the popular online video site for as much as USD 1.6 billion. The rumor originally appeared Thursday night on the Techcrunch blog.

"Rumors are rumors and just that," Cuban said, a frequent critic of YouTube, claiming the popular online video site will eventually run afoul of US copyright laws, much like the original Napster.

Google's pursuit of YouTube would underscore the race by established Internet companies to keep pace with the surging popularity of new sites. Google's video site has less than half the users of YouTube, according to Nielsen//NetRatings. YouTube, friend-finder page Facebook.com and news site Digg.com are among operators winning millions of viewers each month.

"They are buying audience,'' said Charlene Li, an analyst at Forrester Research in San Francisco. "It totally makes sense. The biggest problem Google Video has had is that they started with a business plan not a user model."

Google told internetnews.com that it does not comment on rumour and speculation. Neither did YouTube respond to telephone or e-mail inquiries for comment.

The chart below shows that YouTube surpassed Google Video in early 2006, and that last month YouTube received a market share of visits four times greater than Google Video. Google's replacement of the Froogle link with the Video on the homepage in August resulted in a 179% increase in visits to Google Video from July to September 2006, and only a 19% decrease in visits to Froogle over the same time period. Google obviously made the calculation that it had much more to gain from Google Video than Froogle. YouTube's market share of visits increased by 24% in the same July-September period.



Google is YouTube's second most important source of traffic other than MySpace. In September 2006, 10.7% of YouTube's upstream visits came from Google, while MySpace accounted for 16.2% of YouTube's upstream traffic. But what does that look like from Google's perspective? The chart below shows the percentage of Google's downstream visits to YouTube, Google Video, and Froogle. Beginning in late June, Google began sending more traffic to YouTube than Google Video, which most likely prompted the August placement of the Video link on the home page. Taking away the Froogle link in August did not so severely decrease the amount of traffic Google was sending Froogle as it increased the amount of traffic to Google Video.



How are the audiences for Google Video and YouTube different? Google Video skews more male and older than YouTube, and a look at the Top 100 videos on Google Video gives you a hint of soft porn, while the most viewed videos on YouTube (despite the ads) seem a bit more childish in nature. Also, YouTube's average session time is double that of Google Video's, at 18 minutes 33 seconds in the month of September versus 9 minutes 9 seconds for Google Video. YouTube is just plain sticky compared to Google Video.

On the other hand, Josh Bernoff, an analyst at Forrester Research, said a takeover by Google, which already has a video service, would "make a strange sort of sense".

"Google has a weakness in that the community space in the web is becoming more and more important," he said. "They're beginning to lose opportunities to MySpace."

Mr Bernoff said Google's engineers could help YouTube build new tools that limit users' ability to upload copyrighted content.

So should Google buy YouTube? In our opinion, Yes! Will Google end up buying YouTube? Only time will tell. Watch this space.