It’s a done deal, but one that has generated so much blog and press coverage in its anticipation: Google announced today it is buying YouTube, a company founded only in February 2005, for $1.65 billion in a tax-advantaged stock-for-stock deal. The deal-makers held a conference call after the announcement was released to provide more color and details.
“It’s hard for me to imagine a better fit for another company…as far as the platforms that YouTube has built as well as a cultural fit. This really reminds me of Google a few years ago,” Google co-founder Sergey Brin said.
With Google as its parent company, YouTube will develop “a way to harness the power of user-generated content that didn’t exist before,” Chad Hurley, Google’s CEO and Co-Founder, said. YouTube, which had, until recently, insisted it was not for sale, picked Google as the winner in what no doubt was a heated bidding contest because the Mountain View-based search giant will let YouTube be YouTube.
“Those comments [about heading for an IPO] were made because we wanted to remain independent..now working with Google that’s still the case. But now we’ll be able to sharpen our focus in shaping this new media platform,” Hurley said.
YouTube will indeed carry forth and do what it has been doing best, according to Google CEO Eric Schmidt. “It makes perfect sense to continue YouTube as a brand and as a community and as a separate business for Google,” he said.
Google Video will continue as a video sharing service and Google may even step up the somewhat lackluster video option. “Google Video is a very valuable part of the Google experience and in fact it will be integrated even more in Google overall,” Schmidt predicted.
Both companies hinted at bigger and better video things to come. Schmidt said there were more acquisitions in the video sector on Google’s drawing board. YouTube is “one of many investments that Google will be making to make sure that video has its proper place online and in style and worldwide.”
YouTube’s mission is “to create a new media platform for consumers and partners to distribute their media content worldwide,” Hurley said. “This has inspired us to create a new model, a new video platform for content on the web.”
Brin reinforced the dovetail fit between Google and YouTube’s business models, saying that video plays into not only Google’s search strengths but also into the rapidly rising business of video advertising on the web. “Video is a very important part of the world’s information. When you think about search, oftentimes when you want an explanation or understanding of something, what better way to see it than through a video stream,” he said. “Video is a great medium for advertising. From that point of view, we’re really excited about YouTube.”
The big copyright infringement debate didn’t figure all that prominently in the discussion. Both companies say they respect the rights of rights holders and that the deal won’t change much in that regard. If anything, the combined resources of Google and YouTube will likely yield new means of helping copyright holders identify when their content appears in uploaded videos, such as content “fingerprinting.”
YouTube’s new content deals announced today (including one with formerly antagonistic Universal Music) are all steps in this direction, Hurley said.
Bottom-line: This is a huge deal, not necessarily because Google and YouTube will create bigger or better technologies or business models, although that’s likely to happen. It’s a huge deal because, as Google’s Schmidt said during the call, “it’s the beginning of the Internet video revolution,” a defining moment that crystallizes the fact that Internet video is big business. If you thought that Internet video was already a hot sector, just sit back and watch the rush of deals, investments, clashes and carryings-on that will now take place on Wall Street, in Hollywood and in the board rooms of every major communications company in the world.
Cynthia Brumfield at 5:05 PM|Comments(1)
GOOG made a ginormous video buy wrapped in a social networking site - something that clearly was missing their pantheon of services until now.
Wisdom of crowds, indeed.
Posted by: tagami at October 9, 2006 6:16 PM
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