The rumors are true! Google has acquired YouTube for $1.65 billion in stock. According to a Google press release "YouTube will operate independently to preserve its successful brand and passionate community." The transaction has been approved by both companies and is expected to close in the fourth quarter of 2006. YouTube's 65 employees will remain with the company.

YouTube, which was founded in 2005, delivers more than 100 million video views each day. According to ComScore MediaMetrix, around 12 million people visit YouTube each month. That kind of traffic has made YouTube attractive acquisition bait for all the usual suspects.

Besides Google, Viacom and News Corporation were also rumored to be interested in buying YouTube. Michael Arrington of TechCrunch reports that Yahoo was also seriously considering the purchase and was "in the bidding war until close to the very end."

The news of today’s sale comes on the heels of several announcements heralding YouTube’s new partnership agreements with content providers.

This morning YouTube announced a partnership with CBS. CBS will have a branded channel on YouTube, populated with clips from Survivor, previews of upcoming shows and other content. NBC entered into a similar partnership in June when it created an official NBC channel, which showcased previews of the network's new fall lineup.

YouTube also announced today new partnerships with Vivendi's Universal Music Group and Sony BMG. The music companies will make selections of their creative content available online. In addition the music companies will allow YouTube users to include certain recordings in the content they create. In return, YouTube will share revenue obtained from advertising on all copyrighted content. Today's deals are similar to the arrangement signed between YouTube and Warner Music Group last month.

Last week, Mark Cuban said that anyone who plans to purchase YouTube is a "moron" because YouTube will be dragged under by copyright infringement litigation. Yet, the recent slew of partnerships suggests media giants are willing to make nice with YouTube -- at least for the moment.

At the end of September, YouTube announced its plans to help content creators identify and stop unauthorized use of their proprietary material. A YouTube press release from September 25th states:

"By the end of the year, professional content creators, including record labels, TV networks and movie studios, will have the opportunity to authorize the use of their content within the YouTube community by taking advantage of YouTube’s new tools and architecture. YouTube has been actively working on the operational details and building the infrastructure for this innovative new framework, which will offer media companies the following:

• Sophisticated tools to help content owners identify their content on the site;


• Automated audio identification technology to help prevent works previously removed from the site at the request of the copyright owner from reappearing on the site;


• The opportunity to authorize and monetize the use of their works within the user-generated content on the site;


• Reporting and tracking systems for royalties, etc."

Do you think that promise is enough to protect copyright holders? Will YouTube be vulnerable to constant copyright infringement suits and go the way of Napster? Has Google, in Mark Cuban's words, been a moron?