Internet search leader Google last night agreed to buy video entertainment site YouTube for $1.65 billion in shares, the highest price yet paid for a consumer-generated media site.
The first deal to value one of the new generation of user-participation web sites at more than $1 billion combines two of the most popular internet brands.
YouTube, which grew in 19 months from a start-up in a garage to now serve up 100 million videos daily, has drawn scrutiny from major media companies for copyrighted television and music videos that users post without owner consent.
While YouTube said it had signed a spate of distribution agreements with major record labels, some analysts warned that Google could still be inviting lawsuits with this acquisition.
Analysts said the deal would thrust Google quickly into the emerging market for video advertising, where it has only a tiny foothold compared with Yahoo and start-ups.
The all-share deal, expected to close this quarter, was structured to make it tax-free for YouTube shareholders and cheaper for Google than paying cash, company officials said.
YouTube was founded in February 2005 as one of dozens of internet video start-ups. It has exploded in popularity since last November by letting users share short clips of home videos and programming copied from television.
