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eBay and YouTube

I generally don’t write much about video, but lately I have been thinking a bit more about video. As I have mentioned before, video is the data format that I claim to understand the least. However, I am fascinated by YouTube, both as a social phenomenon and a business opportunity, and this is the first of two semi-related posts on YouTube.

I think it would be interesting to see eBay buy YouTube. Before I get into the why, there are a few basic assumptions that I have:

Assumption #1: eBay really wants to have a play in the advertising space.

Assumption #2: eBay would not buy a company whose culture and infrastructure were fundamentally incompatible with its own.

Assumption #3: eBay believes that getting their arms around some form of user-generated conetnt (outside of Meetup) is a good thing to do.

1. Ebay has no real advertising play and vdieo ads could be a good entry point. Ebay has eben seeing good organic growth from PayPal and the core auctions/e-commerce platform it operates. However, online advertising is a very high growth business and one where eBay really has no offering. I find it hard to believe that there aren’t scores of people at eBay who are figuring out how they can crack into the advertising game, be it by buying a search engine or some ad network. If video ads begin to take off, purchasing something like YouTube could be an interesting way for eBay to develop a competency in ads in the user-generated content space and get relationships with brand advertisers.

More interesting, however, would be if eBay could use this acquisition to become more active in the world of web 2.0. Historically, eBay has done a pretty good job of managing its auction community and I would imagine that they could grow some of these other community sites with similar success. If they had a monetization infrastructure outside of commerce, they could potentially open up some new avenues for themselves to explore new businesses.

2. eBay was the community site of the web 1.0 world. If they want to continue to occupy that perch, they should understand what (if anything) is different in the world of web 2.0. eBay has been something of a pioneer in managing profitable online communities. This is not to say that running a video sharing site is the same as running an auction business, but the principles of community management are likely quite similar. YouTube seems like a natural fit from that point of view and eBay is one of the few major web properties that does not appear to be building a video hosting and sharing service.

Perhaps this is a long shot and perhaps it doesn’t make sense. But I think this would be a reasonable bet for eBay to place — they are in danger of missing out on the entire web 2.0 movement (unless you count Skype, which I do not) and they seem to be one company who should be uniquely positioned to capitalize on it.