Ballmer doesn’t think the numbers add up:
“[You’ve got to ask] could Google do whatever it is they’re hoping to buy without paying $1.6 billion? Is YouTube really some permanent, long-term thing, or is it a fashion?….Right now, there’s no business model for YouTube that would justify $1.6 billion”
He seems to be saying not much at all, hedging both ways.
The real issue appears to lie with content. Microsoft have pursued a DRM strategy with content producers, and perhaps YouGoogle may derail that to some extent. Many people hate DRM, and personally, I think it’s an antiquated model. The Google Adsense model of paying a high share of revenue to content providers may well appeal to the content providers once they see the numbers, thus making copyright and control issues a bit of a non-issue.
If the advertising is embedded, then it makes sense for the content provider to encourage copying and widespread distribution, which is the polar opposite of a DRM model.