search2006.10.10 08:42


"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," Google chief executive Eric Schmidt said in a statement.

"Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers."

YouTube soared to online popularity after its launch in February 2005. The company claims that more than 100 million videos are watched daily by visitors to the free website, which features a content ranging from silly home videos to snippets of Hollywood films, television shows and concerts.

"Our community has played a vital role in changing the way that people consume media, creating a new clip culture," said YouTube co-founder Chad Hurley.

"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."

YouTube will continue to operate independently with its headquarters in San Bruno, California, after the acquisition is complete, according to Google. All of YouTube's 65 employees were to remain with the company.

In unofficial Silicon Valley tradition, YouTube was launched on its meteoric rise from a garage. In its first foray seeking external funds, the company raised 3.5 million dollars from Sequoia Capital in November 2005. In the newest deal, though, Google will pay for YouTube with shares of its own high-flying stock.

Analysts have touted a Google purchase of YouTube as a symbiotic alliance. By purchasing YouTube, Google would be able to apply its proven prowess for generating revenue through online advertising.

YouTube meanwhile will provide Google traction in the online video-sharing market, where Google's own video service has failed to take off.

"This is the next step in the evolution of the Internet," Schmidt said in a telephone press conference from "YouTube's world headquarters."

"It is a natural next step," Schmidt said in the conference, joined by Hurley, YouTube co-founder Steve Chen, and other Google executives.

"With Google's technology and search leadership we will have the resources to take our services to the next level," Chen said. "We believe this is just the beginning."

Hurley downplayed his previous public mantra that YouTube was not for sale, saying that the point was that the website remains independent and had the resources to thrive.

Google said that it was drawn to YouTube because it was the clear market leader and had put together a "remarkable team" in a short time.

"We think one of the keys to comprehensive search experience will be video," said Google co-founder Sergey Brin.

"On the whole it is hard to me to imagine a better fit with another company. YouTube really reminds me of Google just a few short years ago."

Google said that the reason the deal was done as a stock trade was to provide YouTube owners a tax break while making the takeover "cheaper" for the Mountain View, California, online search powerhouse.

The deal is expected to be culminated by year-end provided it clears regulatory requirements.

"We feel we arrived at a purchase price that is very fair and it is a great value that has been created," said Google vice president David Drummond.

The blockbuster deal was announced on the same day that Google and YouTube unveiled agreements with major studios to post copyrighted music videos online.

The deals were seen as efforts to pre-empt accusations of rampant copyright infringement at the online video-sharing sites and enlist studios as potential beneficiaries of the trend.

All of the new agreements will rely on advertising to generate revenues by encouraging users to click on companies' links alongside the videos.

YouTube was putting new systems in place to "fingerprint" copyrighted material so it could be tracked, Hurley said.

"We are committed to develop tools that help identify content and monetize it in new ways," Hurley said.

Google and YouTube engineers already have dozens of ideas for handling ads, search, and videos, according to Schmidt.

"Most people believe that this is just the beginning of a video Internet revolution," Schmidt said. "I think there is a whole new ecosystem and we are expecting to be a part of it."

Meanwhile, Google Video "will not go away now, or ever," Schmidt said.

Posted by myditto