Ben Reid
6 Oct 2006 13:57
Google Inc. is currently negotiating the possible acquisition of popular video sharing site YouTube.com for roughly $1.6 billion, according to an insider, who also added that talks are at a sensitive stage, and proceedings could well fall through.
According to company stats, videos are viewed on the site over 100 million times a day, with 65,000 new videos being added by users each day.
Purchasing Youtube would give Google the potential become the lead player in the online video sharing market. According to research company Hitwise, YouTube commanded 46% of visits to U.S. online video sites in August, way ahead of MySpace's social-networking site, which took a 23% share, with Google Video taking 10%.
Analysts believe that a move would make sense for both parties.
"It's damn cheap for a company that already has a global presence," said Trip Chowdhry, an analyst for Global Equities Research. "YouTube's brand identity is no less than Google's and is no less than Coke's.
One significant issue YouTube has had is that a large portion of videos viewable on the site contain copyrighted material, which has already caused friction with Universal Music Group. Although the site does co-operate with demands by copyright holders, analysts believe the company is still in a precarious legal position.
But analyst Josh Bernoff of Forrester Research believes that Google, being the large software innovator that it is, may be able to implement automated systems to filter out copyrighted works. He also reckons that Google's presence gives the company much more leverage than YouTube to negotiate deals with copyright holders.
No YouTube representitives could be reached for comment, and a Google spokesman refused to confirm nor deny the reports, stating, "We don't comment on rumors and speculation."
Source:
WSJ