Both The New York Times (NYT) and The Wall Street Journal (WSJ) have articles on the big news about Google and YouTube.
The NYT had an article on Friday saying "Google is in serious talks to acquire YouTube, the wildly successful online video-sharing Web site, for 1.6 billion in cash and stock, people involved in the negotiations said."
YouTube was started by Chad Hurley, Steve Chen and a third friend last year in a Menlo Park, California garage. Hurley is now the CEO while Chen is the chief technology officer. The company claims that users currently view videos on its site more than 100 million times a day. It is clearly the dominant player in U.S. online video-sites, with 46% of all visits to such sites (WSJ).
"Combining Google's huge advertiser base and proven key-word approach with YouTube's huge inventory of tagged content and their engaged audience could be a very lucrative combination if they can pull it off," one industry observer said (WSJ).
At the same time, a purchase by Google would raise serious copyright issues since proprietary video and music is frequently co-opted by YouTube users creating their own video contributions. YouTube currently has a policy of removing videos when someone makes an infringement claim. The CEO of the Universal Music Group, the world's largest recorded music company, has previously complained that YouTube and MySpace "owe us tens of millions of dollars" because of infringements according to the WSJ. Reportedly YouTube and Universal are in talks about a possible agreement that would end all such infringement claims.
Google isn't YouTube's only suitor. Internet companies are looking for what the WSJ calls "front doors" where they can "grab users' attention, and try to link them to other services or hit them with marketing messages." Last year, the News Corporation bought social-networking site MySpace for $650 million dollars. Yahoo is supposedly still in talks with another social-networking site, Facebook. Yahoo, Microsoft, Viacom and the News Corporation have all made advances to YouTube, which has yet to show a profit.
The NYT reports that "The negotiations come as all of the established media conglomerates are in a frenzied hunt to acquire hot Internet properties." The WSJ article said that an acquisition of YouTube "would catapult Google to the lead spot in online video at a moment when consumers are rapidly increasing the amount of time they spend viewing video clips online, and Internet video advertising is booming."
Anyone who followed the courtship of AOL last year will understand that expressing interest is a long way from sealing the deal. YouTube reportedly turned down a previous offer for less money from Google. In his USA Today column on Friday, Kevin Maney quoted an unnamed YouTube employee in saying that "interest in YouTube has gone through the roof and it's been 'crazy' there. A 'ton of offers' have been flying in. 'The fact that just one has been singled out is interesting,' this person said, clearly baffled about how this story came to be."
Both YouTube and Google have refused official comment.