New York (October 10, 2006)–Viral video website YouTube will be bought by search engine giant Google for $1.65 Billion later this year, it was announced Monday, with an expected closing in the fourth quarter.
While YouTube has become a popular destination for websurfing students and bored office workers, serving up more than 100 million videos for free per day, the website has yet to turn a profit and has raised the hackles of numerous media entities, from record companies to movie studios and TV networks, for distributing copyrighted materials such as sitcom episodes and music videos.
Those two issues may start to fade away for the dotcom, which will remain as a separate entity from Google’s own Google Video site. Monday’s announcement was coupled with the announcement of two other deals–commercial partnerships with Universal Music Group and Sony BMG. According to Billboard, the site is in talks with EMI for a similar licensing agreement.
UMG in particular had been making noises in the press, stating that it saw both YouTube and MySpace as “copyright infringers” that could likely owe the music industry “tens of millions of dollars.” The deals, then, come at an important time, as any company buying YouTube would become a prime target for lawsuits. Perhaps unsurprisingly, Google, too, separately pacted with UMG and Sony BMG as well. The deals are reportedly templated on a similar agreement YouTube made with Warner Music Group two weeks ago, which will allow YouTube users to use WMG music in videos they create and upload; meanwhile, the site will also present official music videos, documentary footage, interviews and more.