Techcrunch is reporting that tonight at midnight Sony intends to announce that they are paying an oustounding $65 million for the bay area based video sharing site Grouper. This figure completely blows my mind. I’ve used Grouper before, but my big complaint is that the selection of videos is pretty lame compared to Google Video and You Tube. I liked their social features and the ease of sharing videos, but now that Sony will own the company, there is a good chance that I won’t ever be using Grouper again. According to Techcrunch, Sony plans on leveraging Grouper’s platform by offering subpar Sony videos for download, par DVDs for P2P distribution and they will offer “select” films as mash up content for people to use.
First off, I say screw this select mash up concept. In my view mash ups are fair use and regardless of the content, people should be allowed to create art by combining and mixing material to create a new product. When looking at the movie industry, I fail to see how any of the studios are hurt by having consumers remix their material and post it online. I’d understand if people were just posting the raw films, but a mashup isn’t nearly the same thing and it will only drive demand for the original product. While legally, I understand that copyright holders have rights, I also understand that if the studios want love from the social networks, then they need to learn how to give up control.
Secondily, if $65 million is the right number, then this is totally out of whack with the rest of the market. While I congratulate Grouper on successfully screwing Sony out of their ill gotten gains, I have to question who made this negotiation to begin with.
“However, the Grouper acquisition price is out of whack when compared to other recent video acquisitions. US Comscore data says Grouper had about 542,000 unique visitors in July 2006, compared to YouTubeâ€™s 16 million. Viacomâ€™s recent acquisitions of iFilm (December 2005, 3.3 million U.S. uniques) and Atom/Shockwave (August 2005, 1.3 million U.S. uniques) for $50 million and $200 million, respectively suggest a per-unique-visitor valuation of $15-$20. Grouperâ€™s per-unique-visitor valuation, by comparision, is roughly $70 – $120, depending on whether you look at June or July 2006 data.”
Techcrunch brings up a great point in their analysis on the video sharing market. While this may be one of the hottest areas out there, with You Tube yet to present a compelling business model, $65 million seems like an amazing amount of money for Sony to pay when they could have created the same service themselves. Maybe they know that consumers hate them and they want to hide behind someone elses name, but if this turns out to be true, you can bet that I won’t be fooled into thinking that Grouper is an independent site when I know that the studio
mob bosses are really running the show.