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Contributors: Douglas McIntyre Jon C. Ogg

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Monday, October 09, 2006

As Telegraphed, YouTube Joins Google

Google's (GOOG) telegraphed buy of YouTube is coming to fruition. The search leader will pay some $1.65 Billion in GOOG shares to acquire the #1 video platform with over 100 million daily video viweings. Those CBS, Sony BMG, and Warner Music commitments will be worth a bit more now and should legitimize this business model.

More importantly, Google may surpass Yahoo! (YHOO) now as the number 1 combined search destination on the web. Yahoo! and its properties still hold the pole position for overall web traffic on the web, with Google as number 2, and MySpace actually coming in as number 3. With the combined search from MySpace and with YouTube listed as number 8 it could give it a shot at taking the lead. If not, it very well may eclipse it in the metric of stickiness and "time inside."

"The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and make it universally accessible and useful," said Eric Schmidt, Google's CEO.

Level 3 (LVLT) is the newest YouTube bandwidth provider, and it is trading up almost 1% in after-hours trading. Shares of Google (GOOG) closed up 2% at $429.00 in normal trading, and shares are up another 0.7% at $432.12 in after-hours activity.

Jon C. Ogg
October 9, 2006

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