The big news of the week really is that even though last week rumors flew that Google and YouTube were in talks, no one expected Google to actually pull the trigger on YouTube, and no one expected that much money to fly when the deal flew. The $1.65 Billion USD deal will be all stock, meaning the founders of YouTube are now stockholders of Google, and Google’s stock soared on the news. Those owners could very well cash out Google’s stock, but something tells me they won’t.
The pundits are flying about it as well, with YouTube having massive bandwidth bills and little revenue by comparison to pay them with its massively popular free-video model. The site has garnered incredible popularity over recent months for being the go-to website for free video on the net, easy to upload and easy to share with friends and post on blogs and other websites, and for being the centerpiece of net news like the LonelyGirl15 flap, government whistleblowers whose bosses wouldn’t listen to them posting their tell-alls on the site, and more. YouTube surged past MySpace to be one of-if not the-most viewed site on the internet. The trouble though is that because the site doesn’t charge for video viewing and has few sources of income, it was spending tons of money on the bandwidth required to serve those videos to the public but not making any money in turn.
Google Video, by contrast, was a similar model, first on the block (before YouTube and Yahoo Video and the likes) but wasn’t nearly as popular. Why, who knows, but Google apparently wanted to bring the talent and brains that made YouTube so popular in house to Google. What this means for Google Video as we know it, or for YouTube as we know it is uncertain, some people have suggested some kind of unholy mating (GooTube!) of the two services, but that remains to be seen.