Report: Google to buy YouTube for $1.6B

[Lyte]

This is simply amazing! The guys who started it did so in 2005 and in their garage. Geez!

Google to buy YouTube for $1.6B

October 06, 2006 (IDG News Service) -- Google Inc. is in discussions to acquire YouTube Inc. for about $1.6 billion, although the deal is far from done, and the talks could collapse, The Wall Street Journal reported Friday, citing an unnamed source familiar with the matter.

Google's reported interest in YouTube would reflect a sense of urgency on the part of the search engine giant to improve its position in the red-hot online video market.

Google entered the market in early 2005, at about the same time YouTube was founded. But so far the success has gone to the scrappy start-up, not Google.

In September, YouTube nabbed almost 46% of all U.S. visits to video Web sites, while the video section of News Corp.'s MySpace.com came in second with 21.2%, according to Hitwise Pty. Ltd. Google Video came in third with 11%, followed by Microsoft Corp.'s MSN Video with 6.8% and Yahoo Inc.'s Yahoo Video with 5.6%.

YouTube, in typical start-up fashion, approached the market aggressively, opening up its service to anyone wanting to upload their videos, and quickly became a phenomenon. It embraced tagging and sharing features, creating the most popular online video community.

Meanwhile, Google took a much more conservative approach, at first featuring only videos obtained through formal agreements with professional production houses. Consequently, users had to pay to view many of the videos in the catalog. Months later, it added an upload feature for regular users, but closely policed submissions. It wasn't until recently that it opened wide the service's door and added tagging and sharing capabilities.

Yahoo, Microsoft and AOL LLC are also playing catch-up to YouTube, whose model these large Internet companies are adopting.

Google, Yahoo, Microsoft and AOL need a strong position in this market, due to the increasing popularity of online video. Collectively, traffic to the top 10 video Web sites increased 164% between February and May, according to Hitwise. As traffic to online video sites increases, so does the interest of advertisers, who in turn generate most of the revenue for Google, Yahoo, Microsoft and AOL.

For many years, online video remained an unfulfilled promise, hobbled by high broadband prices, inferior image quality and reluctance by TV networks and film companies to put their shows and movies on the Web. However, in the past 18 months, video on the Web has gained momentum, helped by a critical mass of users with broadband access, improved quality and a willingness by production companies to distribute their films and programs online.

Neither Google nor YouTube immediately responded to requests for comment.

[dr911]

Lyte,

I'd pay $1.68 for YouTube !! (1 dollar & sixty eight cents)......Right ????

[Lyte]

Dude... that's a B as in Billion! Not the number eight! lol

Lyte

[gurrat]

This is interesting but google is slowly overtaking the whole internet. They will sure have a lot to do to take out all duplicated and spam vids from youtube

[Lyte]

You ain't kiddin'! I was listening to a news story about this purchase and they were saying how Google really believes video is the "next" (and current) big thing on the internet. For this reason, they want a piece of the pie!

Lyte

[OulZac]

They bought them for 1.6 billion in stock options, not cash, wich means if those guys can wait a year or two, that 1.6 could be 3.2 billion.

[pooq.co.uk]

One of the VC's that helped with the startup of youtube made an $11m investment for 40% equity as well, not a bad return!

[cheapquality]

Well done google
google is trying to capture whole internet, its the aim of google, thats why google is trying to come in whole fields, google is also providing articles, novels, stories and other softwares too.