Google agrees $1.65 billion deal with YouTube

Search giant Google announced on Monday that it would acquire the hot young video-sharing website YouTube, in a $1.65 billion stock deal.

YouTube has soared in popularity since launching in February 2005 and estimates that more than 100 million videos are watched by visitors to its website each day. The site offers free content, ranging from home videos to snippets of Hollywood films, television shows and concerts.

"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," Google's chief executive Eric Schmidt said in a statement.

 

Clip culture

"Our community has played a vital role in changing the way that people consume media, creating a new clip culture," said YouTube co-founder Chad Hurley. "By joining forces with Google, we can benefit from its global reach and technology leadership."

Hurley and YouTube's other co-founder, Steve Chen, posted a video to the front page of their site announcing the acquisition and thanking the YouTube community for helping make the site a success.

Once the acquisition is complete, YouTube will continue to operate independently from its headquarters in California, US. All of YouTube's 65 employees will also remain within the company.

The alliance will see Google attempt to apply its expertise in generating revenue through online advertising while YouTube will provide Google with a big slice of the online video-sharing market. Google's own video service, Google Video, has failed to take off.

"We think one of the keys to comprehensive search experience will be video," said Google co-founder Sergey Brin. "On the whole it is hard for me to imagine a better fit with another company. YouTube really reminds me of Google just a few short years ago."

Studio agreements

Google said the deal was done as a stock trade in order to provide YouTube owners with a tax break while making the takeover cost efficient. The acquisition should be finalised by the end of 2006.

The deal was announced on the same day that Google and YouTube unveiled agreements with major studios to post copyrighted music videos online. The deals are seen as an effort to pre-empt accusations of copyright infringement and enlist studios as potential beneficiaries of the online video-sharing trend.

Hurley added that YouTube was putting new systems in place to "fingerprint" copyrighted material so it could be tracked. "We are committed to develop tools that help identify content and monetize it in new ways," Hurley said.

"Most people believe that this is just the beginning of a video internet revolution," Schmidt added. "I think there is a whole new ecosystem and we are expecting to be a part of it." Meanwhile, Schmidt said, Google Video "will not go away now, or ever".

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