Although talk of this initially started out as rumor, it appears as though it might actually be true. Several sources, including TechCrunch, Informitv and the WallStreet Journal are saying that, while neither YouTube nor Google will comment, there have been talks between the two companies involving a $1.6 billion purchase of YouTube. Many speculate that this, in fact, makes sense, that YouTube is losing money even though it is growing much faster then Google Video and that Google already sends a large amount o traffic to YouTube, more traffic then almost anywhere, except myspace.
On the surface, this seems like a good deal for both parties, and it certainly is a great deal for Google. But, as Mark Cuban points out, "Youtube now becomes a deep pocketed target. Sure, they can try to work out deals with the biggest media companies, but those deals are going to be ultra expensive...........Its not the big companies they would have to worry about the most. Its the little guy. Youtube would get sued by the thousands of rights holders who will seek the maximum amount per download from Youtube for their content." I'm not sure that this is necessarily true, because if it was why haven't we seen these kind of lawsuits yet? I think the real problem is that, despite its impossible structure and bad interface design, YouTube still provides a space for user-generated content. Forgetting for a moment that this could be the beginning of the end of copyrighted content on the site (cause thats not why anyone goes to YouTube right?), it seems that this is just one step in the direction of creating another space for network television.
In fact its already happening. Also today, it was reported on Federal News Radio, that YouTube struck deals with CBS, Vivendi's Universal Music Group and Sony BMG Music Entertainment, which comes less than a month after YouTube reached a deal with Warner Music Group Corp. As a result of this deal, YouTube will supposedly allow CBS to test out new technology that will help the network find copyrighted content on YouTube and remove it. All three companies will receive advertising revenue from ads that play alongside copyrighted content.
Not really sure exactly how I feel about all this, as I am not particularily fond of YouTube, although I do enjoy a funny cat video every once in a while. I have always believed that there is a better model for distributing and generating shared user content. I have a feeling the deal with Google will go through and, in some ways, it is the direction that YouTube has been going in all along.
***Update. The deal is done. Let the lawsuits begin....maybe.