Sold! Google buys YouTube

Janet Babin Oct 9, 2006

KAI RYSSDAL: There were rumors late Friday. That Google would spend a billion and a half dollars to buy the online video site YouTube. It’s official as of today. The price is $1.65 billion. But the transaction might wind up costing Google a bundle in legal fees, too. From the Marketplace Innovations Desk at North Carolina Public Radio, Janet Babin reports.


JANET BABIN: More than 100 million videos are viewed on YouTube every day. Many are homemade. But some are from copyrighted sources like TV shows.

Google is buying YouTube despite concerns that the video-sharing site could be overwhelmed with lawsuits. Om Malik created the blog GigaOm.

OM MALIK:“It basically makes Google a massive force in the online video space. However, it also opens them up to some sort of litigations.”

But Columbia University law professor Tim Wu disagrees. He says a safe harbor law protects YouTube and its new owner:

TIM WU:“As long as they’re not basing their business model on infringing material, and as long as they take it down as soon as they’re notified, the law says they’re supposed to be OK.”

Three deals announced earlier today could help protect YouTube from copyright infringement lawsuits. CBS announced it will share content and ad revenue with YouTube. Also today, Universal and Sony announced that they’ll make millions of music videos available on the site.

The agreement with Universal was somewhat unexpected. The company recently called online video-sharing sites like YouTube “copyright infringers,” but those comments were made before YouTube got together with Warner Music to share content.

Peter Gaston with Spin Magazine says that agreement, and the exposure it offers to Warner’s artists, probably made Universal switch tracks:

PETER GASTON:“Universal had to look at that and say, ‘This is something that could really endear us to the consumer base.’ You know, they do have a ton of artists who could certainly benefit from it.”

As part of the deal, CBS will help YouTube find copyrighted material and remove it.

I’m Janet Babin for Marketplace.

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