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Google Buys Video-Sharing Site YouTube
By Jesus Sanchez, Times Staff Writer
1:55 PM PDT, October 9, 2006
Google Inc. today agreed to purchase YouTube Inc. for $1.65 billion in stock in a deal that will combine the Internet's largest search engine and its most popular site to watch video.
The transaction, which had been widely expected, comes after YouTube's owners had fielded proposals from such media giants as Viacom Inc. and News Corp. Those suitors and others wanted to capitalize on the company's fast growing website, where visitors view an estimated 100 million videos a day
"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 to create new opportunities for our partners," said YouTube Chief Executive Officer and co-founder Chad Hurley in a statement.
Mountain View-based Google said that YouTube would continue to operate as a separate company and retain all employees. The acquisition is scheduled to be completed by year's end.
"The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and make it universally accessible and useful," said Eric Schmidt, chief executive officer of Google, in a statement.
In addition to attracting hoards of viewers, YouTube has also drawn threats of lawsuits from music labels and TV studios for not adequately blocking copyrighted works. Meanwhile, the 60-person start-up is struggling to make enough money to offset its bandwidth costs.
The deal marks the first time Google, which prefers to fill in its product line with small acquisitions, has bought a technology company that makes a competing — and more successful — product.
It also would be a major acknowledgment by Google that its own video service, launched in January, failed to keep pace with the San Mateo, Calif.-based upstart, founded by Hurley and Steve Chen.
YouTube received 46% of all visits to online video websites in September, compared with 11% for Google, according to Hitwise, a market research firm.
Observers said Google could give YouTube the advertising connections, technology team and legitimacy it needed to dominate the video-sharing business in much the same way that social-networking site MySpace blossomed into an Internet heavyweight since it joined News Corp. last year.
YouTube is experimenting with ways to make money, including charging advertisers to feature videos on its home page, and to create branded channels for the content.
Also, Warner Music Group Inc. agreed to license its entire catalog of music and videos to YouTube in exchange for a cut of any revenue from advertising or sponsorships sold around its music.
By Jesus Sanchez, Times Staff Writer
1:55 PM PDT, October 9, 2006
Google Inc. today agreed to purchase YouTube Inc. for $1.65 billion in stock in a deal that will combine the Internet's largest search engine and its most popular site to watch video.
The transaction, which had been widely expected, comes after YouTube's owners had fielded proposals from such media giants as Viacom Inc. and News Corp. Those suitors and others wanted to capitalize on the company's fast growing website, where visitors view an estimated 100 million videos a day
"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 to create new opportunities for our partners," said YouTube Chief Executive Officer and co-founder Chad Hurley in a statement.
Mountain View-based Google said that YouTube would continue to operate as a separate company and retain all employees. The acquisition is scheduled to be completed by year's end.
"The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and make it universally accessible and useful," said Eric Schmidt, chief executive officer of Google, in a statement.
In addition to attracting hoards of viewers, YouTube has also drawn threats of lawsuits from music labels and TV studios for not adequately blocking copyrighted works. Meanwhile, the 60-person start-up is struggling to make enough money to offset its bandwidth costs.
The deal marks the first time Google, which prefers to fill in its product line with small acquisitions, has bought a technology company that makes a competing — and more successful — product.
It also would be a major acknowledgment by Google that its own video service, launched in January, failed to keep pace with the San Mateo, Calif.-based upstart, founded by Hurley and Steve Chen.
YouTube received 46% of all visits to online video websites in September, compared with 11% for Google, according to Hitwise, a market research firm.
Observers said Google could give YouTube the advertising connections, technology team and legitimacy it needed to dominate the video-sharing business in much the same way that social-networking site MySpace blossomed into an Internet heavyweight since it joined News Corp. last year.
YouTube is experimenting with ways to make money, including charging advertisers to feature videos on its home page, and to create branded channels for the content.
Also, Warner Music Group Inc. agreed to license its entire catalog of music and videos to YouTube in exchange for a cut of any revenue from advertising or sponsorships sold around its music.
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