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Google gobbles YouTube
10-10-2006
by Ciara O'Brien

Google has paid out a staggering USD1.65 billion in stocks for video sharing website YouTube as part of a widely anticipated deal finally announced on Monday.

The consumer media site, which allows anyone to upload their videos and share them with other YouTube users without charge, reportedly attracts 20 million unique visitors per month. Google's own video service, Google Video, has proven less popular than YouTube, which is currently adding some 65,000 new videos per day.

The final purchase price is slightly less than the USD1.8 billion figure that was being bandied about in some quarters of the media over recent days, but considering YouTube has only been in business for 19 months, it is still a significant amount to pay for a relatively new site.

Following the stock-for-stock acquisition, YouTube will continue to operate independently.

"The YouTube team has built an exciting and powerful media platform that complements Google's mission to organise the world's information and make it universally accessible and useful," said Eric Schmidt, chief executive officer of Google.

"Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers."

YouTube is -- unsurprisingly -- delighted with the deal.

"Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and create new opportunities for our partners," said Chad Hurley, chief executive and co-founder of YouTube.

"I'm confident that with this partnership we'll have the flexibility and resources needed to pursue our goal of building the next-generation platform for serving media worldwide."

Of course it's not all good news for the search giant. Although it is obtaining a massively popular website, the acquisition has laid it open to the risk of being sued by disgruntled copyright holders who have found their videos available on YouTube.

Already bloggers are speculating about how much it could cost Google should the litigation floodgates open. With thousands of videos uploaded each day, it could be a hefty price to pay for the site.

However, YouTube recently inked deals with the CBS Television network, Sony BMG and Universal Music to allow it to show copyrighted content owned by the companies without fear of being sued for copyright infringement.