The founders of YouTube Inc. built this year's standout Web phenomenon by figuring out how to make online video sharing easier than ever.
What they had not yet figured out was making money from their site. Google Inc. took that problem off their hands Monday, by agreeing to buy the site for $1.65 billion (Ђ1.31 billion).
The all-stock deal makes YouTube by far the most expensive purchase made by Google during its eight-year history. Last year, Google spent $130.5 million (Ђ103.55 million) buying a total of 15 small companies.
Although some cynics have questioned YouTube's staying power, Google is betting that the popular video-sharing site will provide it an increasingly lucrative marketing hub as more viewers and advertisers migrate from television to the Internet.
"This is the next step in the evolution of the Internet," Google Chief Executive Officer Eric Schmidt said during a conference call Monday.
YouTube will continue to retain its brand, its new headquarters in San Bruno, California, and all 67 employees, including co-founders Chad Hurley and Steve Chen. Meanwhile, Google will continue to run a less popular video service on its own site.
The deal is expected to close before the end of the year, reports AP.
"We are excited to have the resources to move faster than ever before," Hurley, YouTube's 29-year-old CEO, said during a Monday interview.
Schmidt thinks so highly of Hurley and Chen, 28, that he compared them to Google's now 33-year-old co-founders, Sergey Brin and Larry Page.
Brin sees the similarities too. "It's hard to imagine a better fit with another company," Brin said during Monday's conference call. "This really reminds me of Google just a few short years ago."
The two companies even share a common financial bond: Sequoia Capital, an early Google investor that owns a roughly 30 percent stake in YouTube. Menlo Park, California-based Sequoia remains a major Google shareholder and retains a seat on the company's board factors that might have helped the deal come together after just a week of negotiation.
YouTube has drawn less flattering comparisons to the original Napster, the once-popular music sharing service that was buried in an avalanche of copyright infringement lawsuits filed by incensed music companies and artists.