Google Is in Talks to Buy YouTube

The WSJ reports:

"Google  Inc. is in talks to acquire online video site YouTube Inc. for roughly $1.6  billion, according to a person familiar with the matter. The discussions are  still at a sensitive stage and could well break off, this person  says.

A spokeswoman for closely held YouTube could not be  reached for comment. A Google spokesman said, "We don't comment on rumors and speculation." Rumors of such  talks were reported earlier on the TechCrunch blog.

YouTube is a poster child for a new generation of  startups, which is surging thanks to the growth in usage of the Internet and  online advertising. Founded in February 2005 in a garage by three  twentysomething alums of eBay  Inc.'s PayPal electronic-payment  unit, YouTube quickly built a huge consumer following for videos  online.

Now users watch more that 100 million  videos daily, and the site's market  share tops that of similar services from the likes of Google, according to some  research firms. In recent months, the company has tried to profit from its  popularity by expanding the types of ads it sells to include videos on its home  page and reaching out to media companies to defuse the threat of legal action  against it.

Rumors circulated earlier this year that some major  media companies expressed interest in buying closely-held YouTube. CEO Chad  Hurley said at the time that the company was not for sale and an IPO in the  future was a possibility.

YouTube has stood out from the growing corps of online  video services for its simplicity. YouTube  serves up videos from its Web site directly or from other sites where people  insert them, generally not requiring users to download any special software. It  also let consumers display its videos on other sites, such as blogs or personal  pages on News  Corp.'s popular MySpace social  networking service.

Last month, the San Mateo, Calif., company announced a new system to give  media companies more control over the video on the site and to address their  fears that others will profit from consumers' piracy of their content. Warner Music Group is the first  entertainment company to embrace the system. It will post its catalog of music  videos on YouTube and collect an unspecified percentage of the revenue from  advertising appearing alongside them."