Google Acquires YouTube

YouTube LogoThis is hot off the press, I am listening to the conference call press release as I write this. It was announced today that Google has indeed acquired YouTube.

It has been reported that once finalised YouTube will retain it’s unique brand identity. YouTube willGoogle Logo continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. There is a lot of talk in the conference call press release about the advertising potential of YouTube and the reach of the YouTube brand.

Eric Schmidt, Chief Executive Officer of Google:

“The YouTube team has built an exciting and powerful media platform that complements Google’s mission to organize the world’s information and make it universally accessible and useful,”

and

“Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”

Chad Hurley, CEO and Co-Founder of YouTube:

“Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners…”

This was a stock deal and the final number of Google shares that will be distributed is yet to be finalised.

“The number of Google shares to be issued in the transaction will be determined based on the 30-day average closing price two trading days prior to the completion of the acquisition.”

Also announced are new relationships with big brands like SONY, Universal and CBS along with existing deals with the likes of Warner. The aim is that these partners will be to track their content with digital fingerprinting and taging. We have been advised to expect keyword and content searches within one month. As to how these partners will be involved with YouTube was not disclosed. I also thought it ironic considering Universal’s opinion of YouTube.

“…Universal Music Group has taken a rather dim view of YouTube’s activities. CEO Doug Morris has painted YouTube and MySpace with the copyright-infringer brush, saying that they “owe us millions of dollars” for infringement.”

Perhaps they are going to make it up to them, a sweetener perhaps?

Integration of powerful searching within YouTube is touted as one of the benefits of a relationship of YouTube and Google. This was repeated numerous times in the press release conference call and it appears that it will be one of the priorities in the development of YouTube.

Google’s response as to why they have acquired YouTube when they already have video: Google video is doing very well and maintains good partnerships, volume and content that will be enhanced with YouTube. Added was the fact that YouTube offered a more social community that was being done in a way that was unique and open to further development. This hints that it may come to pas that YouTube content will be available on Google Video. The attraction of the social aspect of YouTube is one that certainly appeals to Google as they have executed social networking quite poorly in the past.

In the last twenty four hours the two parties have formed a long list of potential integrated changes, these ideas were not made public. However, advertising systems and the expertise that Google will bring to the deal in this regard was mentioned repeatedly. Google’s advertising platform would create a new model for content delivery and that video offered an excellent opportunity for advertisers. It was clarified that much experimentation is required in regards to advertising strategies and making YouTube a profitable business. Don’t look now but this clearly states that we can expect the advertising to be far more aggressive on YouTube with this acquisition that previously. But will Google do it right? Time will tell.

When asked where is the bulk of profit was expected to come from after the deal has been finalised: No comment.

When asked what the expected revenue share or outlook as to partners benefiting from the deal: No comment.

When asked as to the valuation of the deal: No comment.

Copyright came up only once during the press conference. It was asked what influence copyright had on the acquisition for Google. The stock standard answer was regurgitated from both parties. That they respect the rights holders rights and they will focus on it with the added resources that Google brings, working with content owners to protect their work. Nothing further. They also “protected” both Google video and YouTube under the Digital Millennium Copyright Act. The act is a large document but they are referring to the section that protects them as hosts of user submitted material. That means that the business or host of the material is not liable but the infringer of copyright is, that is the person that put it there. This response seems to suggest that the status quo will remain and that content will not be torn down. Having said that, if it was taken down I doubt that there would be much left.

It is reported by Google that the deal will close within this fourth quarter as all approvals have been meet and there is nothing preventing the deal going through.

YouTube has long said that it is not up for sale and that they are not in talks, when questioned about this they responded by saying that they wanted YouTube to remain independent and develop it to be better for users in the way that they wanted. Google they believe and the structure of this deal will enable them to “…sharpen focus”, and the combined experience and resources of Google would give them what they needed to accomplish this goal.

When asked about the integration of Google with YouTube they responded very strongly that the brand “YouTube” would remain as it was a known brand that brought with it power and strength. It was this that added value to the community, users, and advertisers, said Google. I suggest you to add to that advertising potential and with it money.

In closing I was taken by the phrase referring to the deal that this was:

“…next step in the evolution of the Internet.”

It might be Google’s next step and at this time both parties are quite excited about the potential. But with the rather large stick that Google wields, I would suggest that YouTube has changed forever in ways that only time will tell. according to the press release, expect something within the next month. But it might not all be good.

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