EKE BBB Posted October 9, 2006 Report Posted October 9, 2006 Google Agrees to Buy YouTube for $1.65B -------------------- By MICHAEL LIEDTKE AP Business Writer October 9, 2006, 4:00 PM CDT SAN FRANCISCO -- Google Inc. is snapping up YouTube Inc. for $1.65 billion in a deal that catapults the Internet search leader to 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 hours after YouTube unveiled three agreements with media companies in an apparent bid to escape the threat of copyright-infringement lawsuits. The price makes YouTube, a still-unprofitable startup, by far the most expensive purchase made by Google during its eight-year history. Although some cynics have questioned YouTube's staying power, Google is betting that the popular Web site will provide it an increasingly lucrative marketing hub as more viewers and advertisers migrate from television to the Internet. "We are natural partners to offer a compelling media entertainment service to users, content owners and advertisers," said Eric Schmidt, Google's chief executive officer. YouTube will continue to retain its brand, as well as all 67 employees, including co-founders Chad Hurley and Steve Chen. The deal is expected to close in the fourth quarter of this year. "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," said Hurley, YouTube's 29-year-old CEO. 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, much like the once-popular music-sharing site Napster. But Hurley and Chen, 27, 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. 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 possible acquisition as Google shares climbed $8.50, or 2 percent, to close at $429 on the Nasdaq Stock Market. Several other suitors, including Microsoft Corp., Yahoo Inc. and News Corp., reportedly have discussed a possible YouTube purchase in recent weeks. "This deal looks pretty compelling for Google," said Standard & Poor's analyst Scott Kessler said. "Google has been doing a lot of things right, but they are not sitting on their laurels." 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 67-employee company that was running on credit card debt just 20 months ago. Since Hurley and Chen founded the company 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. The 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. YouTube's conciliatory approach with major media has recently yielded several licensing and promotional agreements that have eased some of the copyright concerns while providing the company with some financial breathing room until it becomes profitable. 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 nearby San Bruno. As its negotiations with Google appeared to 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. Li and Kessler expect even more media companies will be lining up to do business with YouTube now that Google owns it. "It's going to be like, 'You can either fight us or you can make money with us,'" Li predicted. Copyright © 2006, The Associated Press Quote
The Magnificent Goldberg Posted October 10, 2006 Report Posted October 10, 2006 Maybe Google will put in something to make it easy to search for a particular artist or song on Youtube. (I can't see how to do that ) MG Quote
Claude Posted October 10, 2006 Report Posted October 10, 2006 (edited) It's astonishing that Google pays so much for a website that any big internet company could create. Youtube was the first and is the most popular of video upload services, but Google with it's advertisement power would have the possibility of creating an equally popular website on it's own. After all, there were already popular search engines around when Google entered that market from scratch and became a quasi-monopolist. Some "expert" wrote that the Youtube trademark was worth as much as Coca Cola. This must be the internet bubble effect. I somehow can't believe that billions of people on Earth know Youtube and that millions pay for it every day. Edited October 10, 2006 by Claude Quote
rockefeller center Posted October 10, 2006 Report Posted October 10, 2006 but Google with it's advertisement power would have the possibility of creating an equally popular website on it's own. http://video.google.com/ ? Quote
Rooster_Ties Posted October 10, 2006 Report Posted October 10, 2006 but Google with it's advertisement power would have the possibility of creating an equally popular website on it's own. http://video.google.com/ ? When you're as big and ubiquitous as Google, sometimes you forget what you already have. Quote
Claude Posted October 10, 2006 Report Posted October 10, 2006 I know Google Video, but Google did not promote it that much. I didn't notice any attempt to seriously attack Youtube. Quote
The Magnificent Goldberg Posted October 10, 2006 Report Posted October 10, 2006 but Google with it's advertisement power would have the possibility of creating an equally popular website on it's own. http://video.google.com/ ? When you're as big and ubiquitous as Google, sometimes you forget what you already have. Not sure they have much. I tried the link and searched for Sonny Stitt, knowing there are quite a few Stitt videos on Youtube. Nowt came up. Ditto for Grant Green. MG Quote
Claude Posted October 10, 2006 Report Posted October 10, 2006 If Google buys Youtube for all the content that the users have uploaded, then they will have to first dump all the videos that have been shared without the authorization of the copyright holder: all the music videos, snippets of TV shows and series, and so on. I think this is the largest part of the current content. Now that a rich company like Google owns the site, many copyright owners will try to get their share of the success and sue them for copyright infringement, like book editors and newspapers have done before. I'm not sure the personal videos are worth $1.65 billion Quote
rockefeller center Posted October 10, 2006 Report Posted October 10, 2006 (edited) I'm not sure the personal videos are worth $1.65 billion But the name might be worth it. Look at the number of page visits per day. I don't think google cares much for YouTube's video content at this point. Edited October 10, 2006 by rockefeller center Quote
J Larsen Posted October 10, 2006 Report Posted October 10, 2006 I'm not sure the personal videos are worth $1.65 billion But the name might be worth it. Look at the number of page visits per day. I don't think google cares much for YouTube's video content at this point. Yep. I bet almost the whole amount is booked as goodwill. Quote
J Larsen Posted October 10, 2006 Report Posted October 10, 2006 (edited) If Google buys Youtube for all the content that the users have uploaded, then they will have to first dump all the videos that have been shared without the authorization of the copyright holder: all the music videos, snippets of TV shows and series, and so on. I think this is the largest part of the current content. Now that a rich company like Google owns the site, many copyright owners will try to get their share of the success and sue them for copyright infringement, like book editors and newspapers have done before. I'm not sure the personal videos are worth $1.65 billion I'm not familiar with the terms of this particular deal, but very often in acquisitions like this the buyer purchases the assets, not the liabilities. I'd be very surprised if Google didn't insert some kind of language in the deal to limit their exposure, or if they hadn't already started working out agreements with the major copyright holders (as the YouTube founders had). EDIT: Just realized I was being a little stupid... Google is obviously on the hook for any copyrighted material that gets posted to the site as of the time they took ownership. Yeah, this is going to be a challenge for them. Edited October 10, 2006 by J Larsen Quote
Claude Posted October 10, 2006 Report Posted October 10, 2006 (edited) Under the menace of copyright lawsuits, Youtube had started making deals with Warner and maybe others, so if Google wants to avoid legal problems, it has to continue to do the same with many more labels, TV stations, etc. This will add to the cost of the Youtube acquisition. The copyright owners will certainly want to squeeze the maximum out of them. http://www.betanews.com/article/YouTube_Wa...tens/1158592482 Edited October 10, 2006 by Claude Quote
Alexander Posted October 11, 2006 Report Posted October 11, 2006 When I heard about this, all I could think was: "Boy, I wish *I* had thought up YouTube!" It's such a simple idea! And it's literally a BILLION DOLLAR idea! I wish I could come up with one... Quote
Claude Posted October 11, 2006 Report Posted October 11, 2006 (edited) Hey Jim, maybe Google is looking to buy a well-established and successful jazz discussion forum. I would accept selling my Organissimo account for $1000 per post. Edited October 11, 2006 by Claude Quote
Jim Alfredson Posted October 11, 2006 Report Posted October 11, 2006 Hey Jim, maybe Google is looking to buy a well-established and successful jazz discussion forum. I would accept selling my Organissimo account for $1000 per post. Yeah, 'cos jazz nerds talking about a dead music is worth mucho buckaroos!! Quote
The Magnificent Goldberg Posted October 12, 2006 Report Posted October 12, 2006 Hey Jim, maybe Google is looking to buy a well-established and successful jazz discussion forum. I would accept selling my Organissimo account for $1000 per post. Yeah, 'cos jazz nerds talking about a dead music is worth mucho buckaroos!! Dead!?! We talk about Gospel music sometimes, y'know! MG Quote
Jim Alfredson Posted October 12, 2006 Report Posted October 12, 2006 I was being sarcastic, of course. Jazz isn't dead... it just smells funny (Long Live Zappa!) Quote
The Magnificent Goldberg Posted October 13, 2006 Report Posted October 13, 2006 I was being sarcastic, of course. Jazz isn't dead... it just smells funny (Long Live Zappa!) Yes, so was I. (The AAJ board has a shrug smiley ) MG Quote
Claude Posted October 15, 2006 Report Posted October 15, 2006 The copyright owners will certainly want to squeeze the maximum out of them. They're coming .... Big media goes after YouTube/Google Quote
Claude Posted November 3, 2006 Report Posted November 3, 2006 It can't get more frivolous ... UTube Vs. YouTube: You Call this a Litigation Minefield? Quote
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