[Infowarrior] - Google to buy YouTube for $1.65 billion

[Richard Forno]

Google to buy YouTube for $1.65 billion
October 9, 2006 12:58 PM PDT
http://tinyurl.com/etdep

Google has agreed to purchase online video phenomenon YouTube for $1.65
billion in stock, the companies announced Monday after the close of the
stock market.

The deal, which had been rumored for days, will dramatically improve
Google's video-sharing service with one of the Internet's hottest properties
in YouTube, which allows Net users to upload video clips and share them with
the world, for better or worse. YouTube will operate independently, and the
companies will work together on building new features for independent users
as well as for aspiring directors, they said in a press release. The deal is
expected to close in the fourth quarter of 2006.

Google's acquisition of YouTube comes as online video is really starting to
hit its stride. As more and more people have signed up for broadband
Internet connections and the technology behind video-sharing services has
improved, traffic to YouTube's site has skyrocketed. Users have made a very
big deal of uploading videos of themselves, sharing the minute details of
their lives, dancing to popular music or, more controversially, essentially
rebroadcasting clips of popular television shows.

One early example of the phenomenon was the frenzy around the comic "Lazy
Sunday" video, pulled from an airing of "Saturday Night Live." NBC first
demanded that YouTube pull the sketch from its site after people flocked to
the hilarious rap song, which featured two mild-mannered "SNL" cast members
afflecting gangsta-rap personas while recalling a trip to the movies to see
"The Chronicles of Narnia." But YouTube later cut a deal with NBC to allow
YouTube users to post content from NBC programs, and it has followed up that
deal with others involving companies such as Warner Music and on Monday,
Universal Music Group, Sony BMG Music Entertainment and CBS. Still, the
issue of copyrights remains largely unsettled.

Around 100 million videos are available on YouTube on a given day, with
65,000 new videos added every day, according to the company's Web site. It
cited numbers from Nielsen Net Ratings in claiming 20 million unique
visitors a month.

Sequoia Partners provided the original funding of $3.5 million in November
2005, and followed that up with a second $8 million round of funding in
April.