Google Grabs YouTube

Google announced similar partnerships with Sony BMG and Warner Music Group earlier Monday.

YouTube Chief Technology Officer Steve Chen said the company has been hard at work developing new indexing technology using audio fingerprinting and metadata to allow copyright holders to identify material posted on the site.

Media companies like CBS will be able to use the technology to either yank copyrighted content from the site, or opt to leave it online and stream ads alongside it.

Executives declined to provide many details regarding the deal's structure or how Google arrived at the $1.65 billion price.

Google Senior Vice President of Corporate Development David Drummond said that Google used a "synergistic" model to value YouTube, rather than looking at the company on a strictly stand-alone basis.

"We feel we arrived at a purchase price that's very fair and reflects the great value that has been created at YouTube," said Drummond.

And although most of Google's deals until now have been done in cash, Drummond said the company decided to structure Monday's acquisition as a stock transaction in order to make it tax-free to YouTube shareholders.

The deal caps weeks of speculation over a YouTube buyout. CEO Chad Hurley had previously said the company he co-founded in February 2005 was not for sale.