Zeus_Hunt Posted October 10, 2006 Share Posted October 10, 2006 Internet search leader Google is snapping up YouTube for $1.65 billion, brushing aside copyright concerns to seize a starring role in the online video revolution.The all-stock deal announced Monday unites one of the Internet's marquee companies with one of its rapidly rising stars. It came just a few hours after YouTube unveiled three separate agreements with media companies to counter the threat of copyright-infringement lawsuits.The price makes YouTube Inc., a still-unprofitable startup, by far the most expensive purchase made by Google during its eight-year history. Last year, Google spent $130.5 million buying a total of 15 small companies.Although some cynics have questioned YouTube's staying power, Google is betting that the popular video-sharing site will provide it an increasingly lucrative marketing hub as more viewers and advertisers migrate from television to the Internet.YouTube will continue to retain its brand, its new headquarters in San Bruno and all 67 employees, including co-founders Chad Hurley and Steve Chen. Meanwhile, Google will continue to run a less popular video service on its own site. The deal is expected to close before the end of the year.The two companies even share a common financial bond: Sequoia Capital, an early Google investor that owns a roughly 30 percent stake in YouTube. Menlo Park-based Sequoia remains a major Google shareholder and retains a seat on the company's board — factors that might have helped the deal come together after just a week of negotiation.YouTube has drawn less flattering comparisons to the original Napster, the once-popular music sharing service that was buried in an avalanche of copyright infringement lawsuits filed by incensed music companies and artists.While most videos posted on YouTube are homemade, the site also features volumes of copyrighted material — a problem that has caused some critics to predict the startup eventually would be sued into oblivion.But Hurley and Chen have spent months cozying up with major media executives in an effort to convince them that YouTube could help them make more money by helping them connect with the growing number of people who spend most of their free time on the Internet.As its negotiations with Google appeared to be near fruition, YouTube on Monday announced new partnerships with Universal Music Group, CBS Corp. and Sony BMG Music Entertainment. Those alliances followed a similar arrangement announced last month with Warner Music Group Inc.The truce with Universal represented a particularly significant breakthrough because the world's largest record company had threatened to sue YouTube for copyright infringement less than a month ago.While Google has been hauling away huge profits from the booming search market, it hasn't been able to become a major player in online video.That should change now, predicted Forrester Research analyst Charlene Li. "This gives Google the video play they have been looking for and gives them a great opportunity to redefine how advertising is done," she said. Investors applauded the prospect of an acquisition as Google Inc. shares climbed $8.50 to close at $429 on the Nasdaq Stock Market, then added another $2 in extended trading, after the deal was announced. Several other suitors, including Microsoft Corp., Yahoo Inc. (Nasdaq:YHOO - news) and News Corp., reportedly had discussed a possible YouTube purchase in recent weeks. Google's YouTube coup may intensify the pressure on Yahoo to make its own splash by buying Facebook.com, the Internet's second most popular social-networking site. Yahoo has reportedly offered as much as $1 billion for Palo Alto-based Facebook during months of sporadic talks. "Yahoo really needs to step up and do something," said Roger Aguinaldo, an investment banker who also publishes a dealmaking newsletter called the M&A Advisor. "They are becoming less relevant and looking less innovative with each passing day." Selling to Mountain View-based Google will give YouTube more technological muscle and advertising know-how, as well as generate a staggering windfall for a company that was running on credit card debt just 20 months ago. To conserve money as it subsisted on $11.5 million in venture capital, YouTube had been based in an austere office above a San Mateo pizzeria until recently moving to more spacious quarters in a neighboring city. Since the company started in Hurley's garage in February 2005, YouTube has blossomed into a cultural touchstone that shows more than 100 million video clips per day. The video library is eclectic, featuring everything from teenagers goofing off in their rooms to William Shatner singing "Rocket Man" during a 1970s TV show. Most clips are submitted by users. YouTube's worldwide audience was 72.1 million by August, up from 2.8 million a year earlier, according to comScore Media Metrix. Li and Kessler expect even more media companies will be lining up to do business with YouTube now that Google owns it. View: Original Article Link to comment Share on other sites More sharing options...
SliverSamuel Posted October 10, 2006 Share Posted October 10, 2006 just saw that today too, lol Link to comment Share on other sites More sharing options...
3NIGM4 Posted October 10, 2006 Share Posted October 10, 2006 Hope they wont shut it down and open a "copyright" one... because they are getting sued by pricks. I have faith in google management tho Link to comment Share on other sites More sharing options...
Zeus_Hunt Posted October 10, 2006 Author Share Posted October 10, 2006 If they spent $1.65B to purchase youtube.. I dont think they will close it...for sureIf they wanted to, they could have spent the money in starting their own "copyright" site Link to comment Share on other sites More sharing options...
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