Progressing from rumor to confirmation in only a couple of days, Google has bought YouTube. It’s a $1.65 Billion all stock deal. Congrats to the guys at YouTube!
My take is that this is great for both companies. YouTube benefits from the Google tech muscle, having someone else worry about monetization, and the founders get rich. Google becomes the leader in online video, something they haven’t done very well with Google Video, which is supposed to stay alive (at least for now).
How Google deals with copywritten content on YouTube may ultimately make this a great deal for Google or not. If they can quell fears of the major content players and monteize YouTube then it will be a huge success. If on the otherhand, content kings NBC, Universal, ABC, CBS, and Fox get nasty then it may have been the worst $1.65B ever spent.
One immediate worry for Google may be Fox. Fox owns MySpace, where video is exploding and may one day rival YouTube. Fox also says that MySpace is responsible for 60-70% of the traffic enjoyed by YouTube. MySpace already selectively allows outside links and if they choose not to play nice with YouTube then it could spell trouble for Google.
Of course, this is all speculation on my part. Although Fox has said they were surprised by the deal, Google does have an advertising deal with MySpace. I’m sure the Google team knows what they’re doing and will take YouTube to the next level.