Google Grabs YouTube

Meanwhile, Google will not pull the plug on its existing Google Video service. In a conference call with media and analysts following the announcement, Schmidt said Google Video is doing well, but that YouTube has created an impressive new way for people to use and share video online.

"When we looked at the marketplace and saw what was going on there was a clear winner in the social networking side of video," said Schmidt.

So-called social networking sites, in which users generate the content, are the hottest properties on the Web these days. Last year News Corp(NWS Quote) paid $580 million to buy MySpace, a site in which users create personalized home pages about themselves.

YouTube is reportedly the most popular online video site on the Web. The site is loaded with everything from personal home videos to clips of television shows and music videos, all posted by individual users.

Executives at YouTube and Google stressed the importance of enforcing intellectual property in their vision for online video.

In fact, the acquisition was announced hours after each company announced separate partnerships with major media companies, easing concerns that YouTube's popular online video service could be at risk of potentially devastating copyright infringement legal claims.

On Monday morning, YouTube said it had struck deals with Vivendi's(V Quote) Universal Music Group, Sony BMG Music Entertainment and CBS(CBS Quote), allowing each company's music and videos to be posted on YouTube.