Google buys YouTube for $1.65 Billion in Stock

[vansmack]

Google announces it will purchase YouTube
 Search giant spends $1.65 billion in stock on video sharing service
 BREAKING NEWS
 The Associated Press
 
 Updated: 1:21 p.m. PT Oct 9, 2006
 SAN FRANCISCO - Google today said it will buy YouTube for $1.65 billion in stock in a deal that unites one of the Internet�??s marquee companies with one of its rising stars.
 
 A YouTube representative said the startup�??s primary spokeswoman won�??t be available for comment until after the stock market closes.
 
 A partner for the venture capital firm Sequoia Capital, which owns about 30 percent of privately held YouTube, also was unavailable for comment Monday because he was tied up in a meeting. Sequoia was an early investor in Google and retains a seat on the company�??s board of directors.
 
 The deal would be by far Google�??s most expensive in its eight-year history. The lofty price underscores how important Google expects online video to become as more viewers and advertisers migrate from television to the Internet.
 
 While it has been able to extend its lead in the lucrative search market, Google hasn�??t been able to become a major player in online video.
 
 �??This gives Google the video play they have been looking for and gives them a great opportunity to redefine how advertising is done,�?� said Forrester Research analyst Charlene Li.
 
 Investors applauded the possible acquisition as Google shares climbed $9.02, or 2.1 percent, to $429.57 during Monday�??s late-afternoon trading 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.
 
 (MSNBC.com is a joint venture of Microsoft and NBC Universal News.)
 
 �??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 20-something buddies Chad Hurley and Steve 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.
 
 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, 29, 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.
 
 That trend propelled YouTube�??s worldwide audience to 72.1 million through 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 if it�??s bought by Google.
 
 �??It�??s going to be like, �??You can either fight us or you can make money with us,�?��?? Li predicted.
 
 © 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
 URL: http://www.msnbc.msn.com/id/15196982/

[vansmack]

I'm sure these weren't related:
 
 YouTube signs content deals with CBS, Universal, Sony
 San Francisco Business Times - 11:53 AM PDT Monday
 
 YouTube Inc. said Monday that new deals will let it carry videos from CBS Corp., Vivendi's Universal Music Group and Sony BMG Music Entertainment.
 
 Google said separately on Monday that later this month it plans to begin distributing music videos from Warner Music Group Corp. (NYSE: WMG) and Sony Music Entertainment. The videos will be accompanied by ads and available for free on the Google Video site.
 
 One of the concerns about YouTube has been that much of the video posted by its users could violate copyright laws.
 
 By signing content deals, the company could make itself a more attractive acquisition target while also protecting itself from legal action.
 
 CBS will have a CBS "brand channel" on YouTube's site, offering news, sports, Showtime and prime-time programming, starting this month. The companies will share revenue from advertising sponsorships.
 
 Vivendi's Universal Music Group (NYSE: V) will give YouTube viewers access to thousands of music videos. Financial details of the deal were not disclosed.
 
 Sony BMG Music Entertainment will make video content available and let some songs be used in amateur video uploads on YouTube. The joint venture between Sony Corp. (NYSE: SNE) and Bertelsmann AG will also share advertising revenue with YouTube for music videos.
 
 Silicon Valley/San Jose Business Journal

[Herr Professor Doktor Doom]

It says a lot about our world that the Google/Youtube acquisition is running a close second in terms of news coverage to North Korea's nuke test.   Since Google's worth vastly exceeds North Korea's Gross Domestic Product, that's not quite as ridiculous as it might seem.

[saintangelsin]

this is quite sad. i get the feeling all of the good stuff on youtube is going to be gone soon. nothing good on the internet lasts forever, which if you ask me, totally sucks!

[Jaguar]

Originally posted by saintangelsin:
  this is quite sad. i get the feeling all of the good stuff on youtube is going to be gone soon. nothing good on the internet lasts forever, which if you ask me, totally sucks!

My thoughts exactly! I suspect it will be a cross between what you get on Launch.com mixed with all of our bad crap with very little of the good music videos that aren't produced and pushed by the major studios. They will also probably price all of the Indies, or other low budget musicians, right out of cyberspace. Even if it is advertiser funded, something will screw it up.
 
 On the other hand, sites like YouTube and MySpace are so popular and even essential, especially for the many musicians out there, that something, somewhere, will pop up at some point. We'll all just have to find each other again.

[vansmack]

Originally posted by saintangelsin:
  this is quite sad. i get the feeling all of the good stuff on youtube is going to be gone soon. nothing good on the internet lasts forever, which if you ask me, totally sucks!

Have you guys ever used Google video?  What would lead you to believe that Google is going to remove anything on YouTube?
 
 This isn't about making money on content.  This is about making money on advertising.  The content drives the web traffic, which in turn leads to advertising possibilities.  The only difference between YouTube and Google video is that YouTube had millions more click then Google Video.  The concept is the same.  Google bought the traffic, not the concept.

[walkonby]

half of the stuff on you tube is stolen, copyrighted material, and you will soon see a slew of lawsuits if the material remains.

[sonickteam2]

Originally posted by saintangelsin:
  this is quite sad. i get the feeling all of the good stuff on youtube is going to be gone soon. nothing good on the internet lasts forever, which if you ask me, totally sucks!

nothing good lasts forever, period.  thats why the internet works so well, because before something can get totally stale and obnoxious...poof! its gone and something "cool" has taken its place.  anyone who is bored with the internet isnt looking hard enough...or has too many friends  

[Venerable Bede]

MySpace wants to expand relationship with Google: report Tue Oct 10, 11:10 PM ET
 
 NEW YORK (Reuters) - MySpace, the popular social networking Web site owned by News Corp, wants to expand its commercial relationship with Google, after the Internet search giant snapped up online video sharing site YouTube, according to a report in the Wall Street Journal on Tuesday.
 
 The report said that Google Inc chief executive Eric Schmidt and advertising sales vice president Tim Armstrong are expected to meet this week with executives from News Corp, including chairman Rupert Murdoch, to discuss new ways of working together.
 
 One possibility the Journal reports is to expand Google's recently signed $900 million ad deal with MySpace to include video advertising on the Web.
 
 The Journal quotes Ross Levinsohn, head of News Corp.'s Fox Interactive Media division as saying: "If we can figure out the ways to work with them or integrate with them, that would be really good for us."
 
 News Corp and Google spokespeople were not immediately available for comment.

[Venerable Bede]

mark cuban to google- "you're a moron!"
 
 Google seen inheriting YouTube's legal challenges By Kenneth Li and Yinka Adegoke
 Tue Oct 10, 8:18 PM ET
 
 NEW YORK (Reuters) - Google Inc., no stranger to lawsuits, may find a whole new class of complainers lining up for a check after the Web search leader buys video entertainment site YouTube Inc. for $1.65 billion.
 
 The acquisition will give Google a major foothold in the emerging market for video advertising, but it also stands to inherit court challenges from independent film makers, garage bands, television studios and others who may chafe at YouTube users uploading copyrighted material to the site without permission.
 
 Legal experts and industry veterans said these artists and companies could look to YouTube's new deep-pocket backer for payment, either in business deals or courtroom battles.
 
 "For some of the bigger players in the industry, and given the amount of publicity that this deal has brought, it may be a perfect staging area for them to bring an infringement suit," said Kristin Achterhof, partner at Katten Muchin Rosenman LLP, a law firm with Hollywood and music industry clientele.
 
 Google has faced a battery of lawsuits, from trademark infringement suits from auto insurer GEICO and news agency Agence France Presse, to legal spats with the U.S. government over privacy issues, to copyright suits from book publishers.
 
 Although Google and YouTube seem to be on good terms with the media industry by announcing on Monday a spate of deals with music labels, analysts say the legal travails of the Web's most popular video service are just beginning.
 
 YouTube, which serves some 100 million videos per day, has become the target of scorn among some rights owners as the site says it has no idea how many of the 70,000 videos uploaded each day by users are pirated.
 
 Internet veteran and HDNet founder Mark Cuban last month famously called anyone willing to buy YouTube a "moron."
 
 "I don't think you can sue Google into oblivion, but as others have mentioned, if Google gets nailed one single time for copyright violation, there are going to be more shareholder lawsuits than Doans has pills to go with the pile on copyright suits that follow," he wrote, referring to the backache medication, on his blog on Monday.
 
 WAIT AND SEE
 
 For its part, YouTube says it takes down pirated video clips quickly at the behest of rights owners. As a matter of policy and due to its high volume, YouTube does not pre-screen uploads. That policy and ease of use has made it the top video service online.
 
 In September, YouTube discussed a new technology that lets rights owners identify their clips and take a cut of ad revenue or eliminate the clip. That has helped lure new partners.
 
 The world's largest music company Universal Music Group, whose CEO Doug Morris labeled YouTube a "copyright infringer" just four weeks ago, struck a deal with the service to offer thousands of its music videos to YouTube viewers.
 
 YouTube also landed deals with Sony BMG and television network CBS Corp.. The deals were similar to an agreement with the Warner Music Group last month.
 
 The music industry has realized that settling business in boardrooms could be more profitable than courtrooms following a slew of legal action against technology companies over the past five years that did little for declining album sales.
 
 "We're very actively embracing technological change rather than suing these companies," Sony BMG executive Thomas Hesse told Reuters.
 
 But privately, several of YouTube's music industry partners see the deals as merely a trial of a new idea rather than a new media model.
 
 "Music companies are more likely to make a deal (because) they've lost control of their content anyway," said Forrester Research analyst Josh Bernoff. "People who own high-priced video are not particularly comfortable with the idea of somebody else doing whatever they want with the content."
 
 Then there are the thousands of musicians and video programmers who have yet to strike deals.
 
 "The next lawsuits will come from the independent labels or any label who's not licensing to YouTube, which is everyone but the four majors," said Christian Castle, a music industry attorney. "Lawsuits can come from anywhere in the world."
 
 Los Angeles-based Castle said YouTube's lax policy that helped it win viewers will have long-term repercussions.
 
 "The young entrepreneurs in Silicon Valley tonight are trying to figure out how to build a better YouTube and they are not thinking about getting the licenses for content owners," Castle said. "That's the real damage that Google has done by rewarding these people."

[Dr. Anton Phibes]

The strange thing is that last night I had an annoying pop up on Youtube from Circuit City that I couldn't knock out........first time that has EVER happened on the service......they can't be upping the ads and popups already,can they?

[vansmack]

Originally posted by walkonby:
  half of the stuff on you tube is stolen, copyrighted material, and you will soon see a slew of lawsuits if the material remains.

Unless, of course, Goolge works out a deal with the content providers to share ad revenue from web pages that display their content.  Then it's a gold mine that TV could never produce....

[walkonby]

Originally posted by vansmack:
   

Originally posted by walkonby:
  half of the stuff on you tube is stolen, copyrighted material, and you will soon see a slew of lawsuits if the material remains.

Unless, of course, Goolge works out a deal with the content providers to share ad revenue from web pages that display their content.  Then it's a gold mine that TV could never produce.... [/b]

i myself love me some you tube; it make me sooo horny g.i., me sucky sucky it long time.  i hope it remains the way it does, but now that the almighty google dollar controls it, who's to say.  are the days of free you tube behind us?

[easement]

So weird that google stock went up after this acquisition.  Not that I can afford any, but usually stocks go down a lot after a big buyout like this. Is this then beginning of the end for google?

[vansmack]

Originally posted by Dr. Jonas Sulk:
  The strange thing is that last night I had an annoying pop up on Youtube from Circuit City that I couldn't knock out........first time that has EVER happened on the service......they can't be upping the ads and popups already,can they?

Google does not believe in or support popup ads.  I'd check you computer for spyware.