Google in Talks To Buy YouTube For $1.6 Billion
Deal Could Put Search Giant
In Top Spot for Online Video;
A Front Door for Web Visits
The latest prize in the great Internet land grab, online-video company YouTube Inc., could soon be snapped up by Google Inc.
Web-search giant Google is in talks to acquire YouTube for roughly $1.6 billion, a person familiar with the matter says. An acquisition of the closely held company 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.
The discussions between Google and YouTube are still at a sensitive stage and could break off, says the person familiar with the matter. Other technology, media and entertainment companies have expressed interest in taking stakes in YouTube this year, according to people familiar with the matter. Google rival Yahoo Inc. earlier this week expressed interest in holding acquisition talks with the video start-up, these people say. YouTube also turned down a lower proposed value from Google earlier this week, before commencing discussions about the possible $1.6 billion deal.
A YouTube spokeswoman and a Google spokesman said they don't comment on "rumors and speculation." Rumors of such talks were reported on the TechCrunch blog.
The discussions come amid a flurry of acquisition talks initiated by media and technology companies looking to broaden their online presence. Yahoo and other companies have recently held discussions about buying social-networking site Facebook Inc. for around $1 billion or higher, say people familiar with the matter. The Yahoo talks with Facebook are continuing, says one of those people. Sony Corp.'s Sony Pictures Entertainment in August said it paid about $65 million to purchase closely held video-sharing site Grouper Networks Inc. Rupert Murdoch's News Corp. bought social-networking site MySpace last year for $650 million in a landmark transaction.
ALL EYES ON YOUTUBE
See a chart comparing YouTube's traffic with other top video sites.YouTube's 29-year-old CEO, Chad Hurley, and its 28-year-old chief technology officer, Steve Chen, started the company in Mr. Hurley's Menlo Park, Calif., garage last year, along with another former colleague from eBay Inc.'s PayPal electronic-payment unit. Early videos on the site prominently featured the cat of Mr. Chen.
Like Web browsers and search engines before them, YouTube and social-networking sites are recognized as front doors to the Internet where companies can grab users' attention, and to try to link them to other services or hit them with marketing messages. News Corp. has already turned MySpace into a lucrative ad and promotional machine; in August, Google guaranteed MySpace and some other News Corp. sites a minimum of $900 million in ad revenue over the next 3? years under an ad-brokering deal. Media companies have also been keeping a close eye on YouTube as a test case at a moment when consumers' online-viewing habits and corporate strategies are in flux.
A deal between YouTube and Google would combine Google's massive online ad system, which handles ads from hundreds of thousands of advertisers, with the top online-video site, according to several research firms. YouTube, San Mateo, Calif., says consumers view videos -- which range from short home videos of household pets to clips recorded from TV shows -- more than 100 million times daily through its service.
WALL STREET JOURNAL VIDEO
WSJ's Kevin Delaney reports that Google is in early talks to acquire YouTube and that Yahoo has also expressed interest in a possible deal.
? Plus, MarketWatch's Bambi Francisco explains why a deal between Google and YouTube could soften the blow of potential copyright lawsuits for the video sharing site.
A purchase by Google, Mountain View, Calif., would also bring YouTube into a company that doesn't compete with other media concerns by producing or broadcasting its own video. That likely would make it easier for YouTube to continuing cutting deals with media and entertainment companies to carry their videos. General Electric Co.'s NBC Universal signed an advertising and content deal with YouTube in June, and Warner Music Group Corp. last month said it is working with YouTube to make its music videos and other content available through the site.
"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," says Mark Kingdon, chief executive of Organic Inc., a San Francisco online-ad agency owned by Omnicom Group Inc.
A purchase by Google could further incite some content owners who are already concerned that their copyright video and music is available without their permission through YouTube. Potential copyright issues have concerned Yahoo amid its continuing interest in acquiring YouTube, says a person familiar with the matter.
MORE ON YOUTUBE
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? Page One: Online Video Challenges Music Industry
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YouTube, which says it removes any videos with infringing content when notified, already faces one lawsuit related to this issue. Robert Tur, the owner of Los Angeles News Service, named YouTube in a complaint filed in July in U.S. District Court in Los Angeles. He alleged copyright infringement in connection with several videos available through YouTube. YouTube has said Mr. Tur's suit is "without merit."
Doug Morris, chief executive officer of Vivendi SA's Universal Music Group, last month told investors that YouTube violates copyright laws by allowing users to post music videos and other content. He said YouTube and MySpace "owe us tens of millions of dollars." People familiar with the matter say Universal, the world's largest recorded-music company, and YouTube have been in discussions about a possible agreement that would head off any Universal legal action against YouTube.
A connection with a deeper-pocketed Google could lead other content owners to take copyright action. The Internet-search company is no stranger to copyright disputes: It is currently facing off in court with book publishers, authors and a news agency over Google's use of their content.
Founded in February 2005, YouTube is the poster child for the boom under way in online video. By the time of the Web site's official public release in December 2005, consumers were viewing YouTube videos more than three million times daily. That month, someone posted to YouTube a skit from NBC's "Saturday Night Live" dubbed "Lazy Sunday," featuring two grown men rapping about cupcakes, red licorice candy and the movie "The Chronicles of Narnia." Consumers viewed "Lazy Sunday" six million times before NBC on Feb. 3 contacted YouTube to request that it be removed, along with hundreds of other clips.
The start-up, which has 67 employees and is located in an office above a pizza restaurant, has been racing to build new systems for generating ad revenue. At the same time, it is negotiating with media and entertainment companies about online use of their content, some of which is available without the video owners' permission on YouTube's site.
A purchase of YouTube would give a big boost to the online-video efforts of Google. YouTube commanded 46% of visits to U.S. online-video sites in September, according to market-research firm Hitwise. That compared with a 21% share for the video activities of News Corp.'s MySpace site and 11% for Google Video. Microsoft Corp., which recently launched a test version of its Soapbox service for users to submit and view videos, had a 7% share of such visits, according to Hitwise. News Corp. in the past expressed interest in discussing a possible acquisition with YouTube, say people familiar with the matter. News Corp. declined to comment.
Leading closely held online-video sites include Heavy.com, Break Media and Metacafe Inc., which each had around three million U.S. visitors in August, according to research firm NetRatings Inc.
Google launched its online-video service in January 2005. But its early efforts included only still images of TV shows, and it alienated some companies whose programming it had recorded without their permission.
Google co-founder Sergey Brin told reporters Thursday that the company plans to increase the prominence of videos on its site, by displaying some relevant clips alongside the results provided by its market-leading Web-search engine. Google is in discussions to license music videos and other content for its own video service with Universal Music, EMI Group PLC, Warner Music and Sony BMG, a joint venture of Sony and Bertelsmann AG, people familiar with the matter say.
Google and YouTube share a common backer in venture-capital firm Sequoia Capital, which helped finance Google during its early days and has provided funding to YouTube.
谷歌拟出价16亿美元收购YouTube
互联网大圈地时代地标频现，又一块风水宝地－－网上视频公司YouTube Inc.有可能即将落入谷歌(Google Inc.)之手。
据知情人士透露，互联网搜索引擎巨头谷歌目前正在商谈以大约16亿美元的价格收购私人控股的YouTube公司。在网络用户观看网上视频时间日渐增加、网上视频广告日益繁荣的今天，收购YouTube将使谷歌一跃而占据网上视频领域的领军地位。
知情人士称，谷歌与YouTube之间的谈判目前还处于敏感阶段，随时可能破灭。今年早些时候也有其他科技、媒体和娱乐业公司曾表示过要收购YouTube的股份。谷歌的竞争对手雅虎(Yahoo Inc.)上周曾表示有意就收购事宜与YouTube举行磋商。在开始与谷歌就这笔价值16亿美元左右的交易进行谈判之前，YouTube曾拒绝过谷歌一个报价较低的收购提议。
YouTube和谷歌的发言人均表示不愿就“传言和猜测”发表评论。
近段时间来，力图拓宽网上业务的媒体、科技业公司发起了一连串的收购谈判。据知情人士称，雅虎和其他几家科技公司最近就曾商谈要以10亿美元甚至更高的价格收购社交网站Facebook Inc.。雅虎和Facebook的谈判眼下仍在进行当中。索尼(Sony Corp.)旗下的索尼影视娱乐公司(Sony Pictures Entertainment)今年8月曾表示，它斥资大约6,500万美元收购了私人控股的视频共享网站Grouper Networks Inc.。默多克(Rupert Murdoch)的新闻集团(News Corp)去年也以6.5亿美元的价格买下了社交网站MySpace。
现年29岁的YouTube首席执行长Chad Hurley和28岁的首席技术长Steve Chen和一位曾就职于eBay Inc.电子支付子公司PayPal的同仁去年在Hurley位于加州门洛帕克的家中的车库里创立了这家公司。网站上最初所放的视频主要是Chen的那只猫。
与它们之前出现的网络浏览器和搜索引擎一样，YouTube和其他社交网站也被视为通向互联网世界的门户，在那里，公司可以吸引用户的注意并将其引入其他的服务或者直接让它们看到产品营销讯息。新闻集团现已将MySpace变成了一个利润丰厚的广告和营销机器。谷歌与新闻集团签署的一份广告代理协议确保了MySpace和新闻集团旗下的其他网站在未来三年半的时间里获得至少9亿美元的广告收入。在网络用户浏览习惯和公司战略不断变化的今天，媒体公司也一直将YouTube当作一块试验田在密切予以关注。
据几家研究公司称，一旦谷歌谈下YouTube这笔交易，它可能会将其现有的庞大网上广告体系与这个一流的网上视频网站有机结合到一起。YouTube曾表示，用户通过其网站浏览视频的次数每天超过1亿次。
另外，如果谷歌收购了YouTube，这家视频网站便无需再通过制作和播放自己的视频来与其他媒体公司竞争。这样一来，YouTube继续与媒体和娱乐公司就登载其视频内容达成协议也就变得相对容易。通用电气(General Electric Co.)旗下的NBC Universal今年6月与YouTube签署了一份广告及内容协议。华纳音乐(Warner Music Group)上个月也表示它正在和YouTube商谈通过它发布音乐视频和其他内容。
Kevin J. Delaney
