YouTube signs up Universal, Sony BMG, CBS, and... Google?

***UPDATE*** DONE DEAL
SAN FRANCISCO (AP) - Google Inc. (GOOG) snapped up YouTube Inc. for $1.65 billion Monday in deal that catapults the Internet search leader to a leading role in the online video revolution. The all-stock acquisition unites one of the Internet's marquee companies with one of its rapidly rising stars.

The price makes YouTube, a still-unprofitable startup, by far the most expensive purchase made by Google during its eight-year history.

Although some cynics have questioned YouTube's staying power, Google is betting that the popular Web site will provide it an increasingly lucrative marketing hub as more viewers and advertisers migrate from television to the Internet.

"We are natural partners to offer a compelling media entertainment service to users, content owners and advertisers," said Eric Schmidt, Google's chief executive officer.

YouTube will continue to retain its brand, as well as all 67 employees, including co-founders Chad Hurley and Steve Chen.

YouTube has won. The company today announced a flurry of deals with music labels to offer music videos and other content free of charge, including one with onetime nemesis Universal, which recently claimed that YouTube owed it millions of dollars for copyright infringement. In addition to the Warner deal announced two weeks ago, YouTube has now signed on Sony BMG, Universal, and CBS.

As if that wasn't enough, both Reuters and the Wall Street Journal are reporting that Google will buy the company for more than $1.5 billion in a move that was announced this evening.
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