Google Buys YouTube for $1.65 Billion

Over 30 readers wrote about Google's purchase of YouTube today for $1.65 Billion, as rumored last week. The all-stock transaction is the single largest purchase in the company's 8-year history. The move follows on the heels of Google's convincing Sony and Warner Music to put music videos online for free. Reportedly, YouTube will retain its brand and all its 67 employees, including co-founders Chad Hurley and Steve Chen.

Comments

YouTube not evil!

[mrbanzai]

SO glad that YouTube will now be sheltered by "the good guys" ... assuming they stay the good guys *cautious glance over shoulder*

Re:YouTube not evil!

[vertinox]

SO glad that YouTube will now be sheltered by "the good guys" ... assuming they stay the good guys *cautious glance over shoulder*

I'm more than happy with that. At least now Youtube will have Google Adsense ads rather than Myspaces "epileptic punch the monkey you win a frigging iPod PS3 viagra sweepstakes" flash banner ads with 400 double click pop ups and unders.

Good buy for Google

[sbrown123]

I know some people won't get why they did this, or how Google will make money from YouTube. I will explain:

First, Google makes money through advertisement. Currently simple text banner ads. But a quick look at other sites will show you a growing interest in video ads. YouTube has a lot of visitors, and if Google plays this correctly they can make more advertisement dollars.

Secondly, YouTube signed some nice contracts with the likes of CBS and two music labels.

Re:Good buy for Google

[sporkmonger]

I expect it was the contracts more than anything that justified the price. The original purpose though, was almost certainly to consolidate the two biggest video players into one. That said, the only reason this happened at all was because it was an all-stock deal. Google's stock was at around $430 today, which a lot of people seem to think is still over-valued, especially by people within Google. If the internal Google people think their own stock is over-valued, it makes sense for them to try to get the most out of it while it's still high.

Re:Hmmmm

[motank]

well the mpaa and riaa might have been itching to pick on poor little youtube but do they wanna pick a fight with google? i expect google will force these companies to deal with it and accept the internet isn't gonna go away (and share some ad revenue)

$1.65 billion IN STOCK

[tpengster]

Keep in mind that Google is not paying dollars -- they are trading Google stock for YouTube stock. So even though $1.65b is a scary number, what you should be asking yourself is not whether YT is worth $1.65b, but whether it is worth 1.25% of Google.

Google made money on this

[nate nice]

Although I disagree with this long term, what most people haven't realized is that Google got YouTube for free. On news they might buy last week, their stock rose ~2%. It rose even more today with more news and will probably raise a bit more tomorrow. So, 1.65 billion in stock was given away which is something like 1.5% of the company. If they just increased the companies worth by 5%, did they not just make a profit buy "buying" this company?

Long term it might not turn out that way, but annually this is great.

Re:So ungoogle

[Firehed]

Google's worth about a hundred billion dollars? It's impossible to nail that figure and not be evil.