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Google Buys YouTube

Published October 10, 2006 in Internet
By Ryan Parsons | Image property of YouTube.
YouTube YouTube
Last Friday it was suggested the Google was looking to acquire YouTube for somewhere near $1.6 billion. Though neither Google nor YouTube were talking, the deal has now been completed and YouTube was able to pull in another $50 million out of the deal.

Google Acquires YouTube

Two years, it only two years after going live for YouTube to become one of the top internet sites on the net with over 100 million videos opened daily. Though the company claimed to be losing millions in bandwidth costs up to last March, what is a few million lost when you can make a billion?

Just when we thought the MySpace acquisition by Fox was high -- $580 million -- we have Google blowing $1.65 billion. Maybe we should contact Google and see if they'd like to buy us for $10 million. Maybe?

According to AP, Google Inc. did an all-stock deal with YouTube by purchasing every share for $1.65 billion. This is by far the most expensive purchase made by Google during its eight-year history; and this is from a company that claims they will not acquire another site unless they work out a 'good deal.'

Though successful in traffic terms, YouTube is still experimenting on how to earn revenue. The site was originally ad-less but, to cover the high bandwidth costs, began showing Google ads and then full banners.

Though there are many who assume that YouTube has peaked, Google sees the site as an increasingly lucrative marketing hub as more viewers and advertisers migrate from television to the Internet.

Google does not plan to throw out its own Google Video.

Any risks for Google? It seems the biggest risk (so far) is the copyrighted material that appears on the site every day. If you look close, you can find entire films broken up into two or three parts on YouTube. The movie studios and television networks monitor the site closely to help quickly remove such material. Can they be sued? Sure, but it's doubtful. The same studios that have been watching YouTube closely also have their own user accounts on the site to show off new clips from upcoming projects for free.

After the purchase of YouTube, Google Inc. shares climbed $8.50 yesterday to close at $429.

Stay tuned for updates.

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Compiled By (Sources)
Ryan Parsons
Sources: Image property of YouTube.

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