The ramifications of this deal will be felt for quite some time. CNET News.com is reporting that Google has purchased video sharing site YouTube for $1.65 billion in stock. The deal has been rumored for some time, but I didn’t think it would actually go through:
“This is one of many investments that Google will be making to put video at the heart of a user’s online experience,” said Google CEO Eric Schmidt on a conference call after the deal was announced. “When we looked at the marketplace and saw what was going on, we saw a clear winner in the social networking side of video, and that’s what drove us to start the conversations with YouTube.”
You can listen to an audio interview with Eric Schmidt and YouTube CEO Chad Hurley here.
Also today, YouTube announced some major distribution deals with the big record labels. All of a sudden, the threat of a lawsuit looks much less likely, doesn’t it? I wonder what the MySpace people will think of this deal. I’m sure they are a little scared now that YouTube has Google’s backing.
So the deal is done, Google is now king of video. Still, I can’t help but wonder if a simple, exclusive ad-deal with YouTube would have been a better investment for Google? I guess time will tell.
Read: CNET News.com