Google buys YouTube

It was in the air during past week, now it is official. Google has bought YouTube, the the internet video-sharing success story, for $1.65bn. YouTube is a young company, created in 02/05, that has built an exciting and powerful media platform that attracted an estimated 72m individual visitors each month who view about 100m videos per day. With this acquisition, Google clearly marks its entry on the online video market and has chosen its way to dominance in the online video market. But the move can be risky for Google. YouTube has made its success on allowing users to upload virtually any video content online, with a business model similar to Napster in early days. Majors tolerate more or less YouTube business as long it is not a threat to their own business. But backed by Google, YouTube is now boxing in an upper category, and Google will not tolerate any more that YouTube continue to violate copyright on the content it offers online. If the social networking context is changing, will customers stay and will revenues continue to grow? YouTube likely signed distribution deals with three Majors ( Universal Music, CBS and Warner) in past few days, and will share ad revenues. Google has also signed similar deals with Sony BMG and Warner Music Group.