The Wall Street Journal is reporting that Google officially has announced its acquisition of YouTube. The WSJ also provides a link to Google’s press release announcing the deal, though you can find that document on Google’s website, too.
More than a week ago, Mark Cuban might have been correct in his assessment, if brusque in his tone, that "anyone who buys YouTube is a moron." That was before YouTube struck critical content distribution deals with CBS, Vivendi’s Universal Music Group, and Sony BMG Music Entertainment, all of which came less than a month after YouTube reached a deal with Warner Music Group Corp.
The threat of copyright-infringement lawsuits against YouTube wasn’t completely eliminated by those agreements, but it was significantly mitigated. Those deals officially constitute a trend, a harbinger of future deals that a Google-owned YouTube ought to be able to strike with other major content and copyright holders.
Make no mistake, those deals are absolutely necessary. Although YouTube is referred to as a site that features "user-generated content," that’s a misnomer. What YouTube actually features, overwhelmingly, is "user-uploaded content."
The most popular material on YouTube still belongs to companies whose purpose is the for-profit generation and distribution of entertainment or information content. That is unlikely to change in the foreseeable future, and that’s why Cuban had his reservations, to say the least, about the sanity of anyone buying YouTube. It’s also why YouTube’s recent wave of content-distribution deals with major recording labels and networks has paved the way for Google to make its acquisitive move.
Now, as the dust clears and the facts settle — after an intense, if brief, period of rumor and speculation — we can see why Google made this move. The match between YouTube’s content engine and Google’s online-advertising machine always was readily apparent, but now the clouds of rampant copyright litigation have lifted to remove the one barrier that could have, and probably would have, scuttled the deal.
For $1.65 billion in stock, for Google, this was a good deal.