YouTube Is for Old Fogies, Too

A key selling point of Google (Nasdaq: GOOG  ) is its broad appeal: kids to seniors and everyone in between. So when the company plunked down $1.65 billion to buy YouTube, it did seem out of character. Is the company targeting the fickle youth demographic? Well, according to some recent studies, this may be off-base. Actually, the demographic for YouTube may be similar to mainstream network television -- making it a possible next generation destination for entertainment.

That's the take from a recent piece on ArsTechnica.com, which analyzes a study from eMarketer. The firm estimates that 54.5% of the YouTube audience is in the age group of 35-64. How about the 25-34 category? Only 19.1%.

But come on, is this some kind of statistical fluke? Interestingly enough, there are other high-profile research companies that validate the results. For example, a study from Nielsen/Netratings shows that about 55% of the YouTube audience is between the ages of 35-64. And Comscore has an estimate of 48%.

I interviewed Chase Norlin, the CEO of Pixsy, a video search service. According to him: "It makes perfect sense that a large portion of YouTube viewers are in a slightly older demographic. The reason? This type of content appeals to just about everybody. What's the longest running show on television? It's 'America's Funniest Home Videos.' This type of short-form content has broad appeal, including internationally."

Essentially, YouTube made it extremely easy for users to upload and share any type of video content. And, as the amount of content increased, the website's user base grew -- as did its diversity. And since this was accomplished by YouTube's loyal users, the cost of content acquisition was minimal.

The problem, of course, is that a fair amount of the content is copyrighted. Of course, some of the content owners are big-time companies like Warner Music Group (NYSE: WMG  ) , General Electric's (NYSE: GE  ) NBC, and CBS (NYSE: CBS  ) .

Ironically, this is really a huge opportunity for these Old Media companies that are looking for growth, as many of them have cut deals with YouTube.

In a way, YouTube is kind of a collection of cable companies; there's enough content to satisfy a myriad of demographics.

So far, there has been no disclosure of the financial terms that Google is negotiating with content owners. However, over the years, the company has demonstrated an ability to build scalable systems that generate significant revenues from a large number of transactions and customers. If it can do the same with YouTube, then the company's $1.65 billion price tag starts to make a lot more sense.

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Fool contributorTom Taullidoes not own shares mentioned in this article.He is ranked 380 out of 14,555 in CAPS.


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