Yahoo (NASDAQ: YHOO) is reportedly working to enter into YouTube's territory with its own video sharing service and even though the firm is officially remaining tightlipped, it has been rumored that the website will be ready for a launch in the next few months.
It has been said that Yahoo's CEO Marissa Meyer had contacted YouTube's content providers, star talents and network channels with the promise of more money to switch from Google to the Yahoo fold. YouTube is under the banner of Google Inc. (NASDAQ: GOOG), which had paid $1.65 billion for the popular video sharing website in late 2006.
In its move to launch its own YouTube service, Yahoo is supposedly also offering better deals to the rival's video makers by offering better advertising revenues, guaranteed ad rates and promotional space on Yahoo's heavily trafficked home page on a non-exclusive basis, among other inducements.
The move comes at the right time for Yahoo as over the recent months, YouTube's content providers have complained of difficulty in making profits from the video sharing website's services. There have also been complaints from the talent stars that they are not being paid enough.
Not much has been learnt about the website that Yahoo is coming up with, but it has been reported that a content management system is being prepared by the firm so that video stars would be able to manage their clips. Yahoo, reportedly, does not want anyone to be uploading content to its service. The firm is more interested in popular, professionally made content and therefore, is seeking mostly already established stars and professionals.
On the flip side, financial analysts are focusing on how Yahoo will fare in competition against the massively popular YouTube. In a long shot, once China's Alibaba becomes public, Yahoo can sell its entire stake and gain $37 billion cash, which it can use to invest against YouTube. However, YouTube's resources is far more massive as Google sits on cash and short-term investments worth $50 billion, which it will likely use to counteract any of Yahoo's moves.
According to Paul Ausick of 24/7 Wall Street, Yahoo will need a massive investment in popular talents to dislodge YouTube. Ausick said this is not likely to come cheap. He said that even though Katie Couric's addition to Yahoo's stable was a start - four months earlier, Couric announced she was becoming the first-ever global anchor at Yahoo - the company would need bigger stars like American radio personality, television show host, author, actor, and photographer, Howard Stern at an enormous contract rate.
Moreover, Yahoo would also have to compete against YouTube in the music streaming sector. Popular services like Spotify, Pandora Media Inc. and Rdio, pale in comparison to the business YouTube has. Yahoo will have to invest significantly in this sector to compete not only against YouTube but also popular music streaming services like Spotify.
Meanwhile, as reports are making rounds of Yahoo looking to launch its own YouTube service, claims are also being made the firm is in attempts to buy existing video sites such as Vimeo. It may be recalled that last year, Yahoo was eyeing a potential takeover of Dailymotion, but the bid was quashed by the French government.
By Faryal Najeeb
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