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Update: Google Buys YouTube


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Internet search leader Google Inc. is in talks to acquire the popular online video site YouTube Inc. for about $1.6 billion, The Wall Street Journal reported Friday, citing a person familiar with the matter.

 

Mountain View-based Google and San Mateo-based YouTube are still at a sensitive stage in the discussion, the newspaper reported on its Web site.

 

The blog TechCrunch had reported on rumors of the acquisition talks. Google and YouTube officials declined comment.

 

Analysts said a Google acquisition of YouTube would make sense for both companies if the reported talks lead to a deal, especially considering Google?s $10 billion in cash on hand.

 

?It?s damn cheap for a company that already has a global presence,? said Trip Chowdhry, an analyst with the San Francisco-based Global Equities Research. ?YouTube?s brand identity is no less than Google?s and is no less than Coke?s.?

 

As YouTube?s popularity continues to soar, she said, Google can help make sure the site?s infrastructure can keep pace.

 

The acquisition would also immediately propel Google to the top of the online video heap. YouTube eclipsed traffic on Google?s video site in February. By July, about 30.5 million people visited YouTube, compared with 9.3 million to Google Video and 5.3 million to Yahoo Inc.?s Yahoo Video, according to Nielsen/NetRatings.

 

YouTube users watch more that 100 million videos daily.

 

Google?s video service lets everyday users post clips, too, and unlike YouTube, Google also gives them the choice of selling video. All YouTube clips are free.

 

YouTube was founded in February 2005 by three former employees of eBay Inc.?s PayPal electronic-payment unit, and its chief financial backer is the Silicon Valley venture capital firm Sequoia Capital, which has invested $11.5 million. Sequoia was also an early Google investor.

 

The 25-employee YouTube is surging thanks to the increased availability of high-speed Internet connections and gadgets such as camera phones and digital cameras capable of taking video. Most of YouTube offerings are short amateur clips, although professional filmmakers, television networks and even political campaigns have posted materials.

 

But many of the site?s videos contain copyright material, putting it at odds with big media companies such as Universal Music Group. YouTube immediately removes videos when copyright holders complain, but analysts said the company is still in a precarious legal position.

 

?Google would be taking on all that liability,? Forrester Research analyst Josh Bernoff said.

 

But Google also could present a solution, Bernoff said, noting that the software innovator could develop automated systems to block attempts to post copyright materials. He also said Google?s size and clout gives the company much more leverage than YouTube to negotiate deals with copyright holders.

http://www.msnbc.msn.com/id/15157075/

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Guest Juanky

Buying YouTube would be a mistake by anyone who doesn't own the rights to a large chunk of video information, in my opinion.

 

Word today was that Google could be looking at an exclusive advertising deal with YouTube instead of the outright purchase. Better for both, IMO.

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I personally don't agree with paying this kind of money for a website. Although youtube has become increasingly popular in the past couple of years, I believe past experience with the tech bust of the 90s should be more than enough to disuade a company from paying so much for a website.

 

Well, the sites have been producing extremely high profits I'd think. However, you're the one at Wharton. That automatically validates your opinion.

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I personally don't agree with paying this kind of money for a website. Although youtube has become increasingly popular in the past couple of years, I believe past experience with the tech bust of the 90s should be more than enough to disuade a company from paying so much for a website.

Then how can you explain the rise to power of Google, as well as sites such as Myspace, Facebook, and YouTube?

 

Shouldn't underestimate Web 2.0

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I personally don't agree with paying this kind of money for a website. Although youtube has become increasingly popular in the past couple of years, I believe past experience with the tech bust of the 90s should be more than enough to disuade a company from paying so much for a website.

Then how can you explain the rise to power of Google, as well as sites such as Myspace, Facebook, and YouTube?

 

Shouldn't underestimate Web 2.0

 

Companies are targeting sites like Facebook and YouTube b/c of their marketing potential, specially with college aged kids...but at the same time, they must factor in the risk associated with the use of these sites being just a fad which will fade away eventually. In the short term, I guess they might be able to reap benefits from this acquisition, but I just don't see this as a reasonable approach in the long term...

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Possibly, but a lot of lessons have been learned since the internet boom and bust. Besides, I would argue that none of the sites previously had the potential or popularity that the big sites now have.

 

The internet shouldn't be a place to be scared of, imo. Facebook, Myspace, Wikipedia, and YouTube play on the same factor that makes eBay, craigslist, Google, and Amazon so popular: the people.

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