Google YouTube buys off music companies on the cheap

Google’s uncanny ability to cow the world’s content owners into Google submission is a key factor in its $130 billion market capitalization and its 25% profit margins (see Google: Web friend or web foe?).

Google’s uncanny ability to cow the world’s content owners into Google submission is a key factor in its $130 billion market capitalization and its 25% profit margins (see Google: Web friend or web foe?).

Google’s financially savvy all-stock purchase of YouTube enables Google to acquire the site via a Google-friendly “cheap” stock-for-stock deal (see Google buys YouTube on the 'cheap': $1.65 billion in Google stock and YouTube gambles big on Google stock).

 

Google has also apparently succeeded in neutralizing potential copyright infringement claims from three of the four largest music companies in the world, collectively representing more than 50% of the $30 billion plus global recorded music market, at the very Google friendly cost of about $50 million in stock.

 

New York Times is reporting:

Three of the four major music companies — Vivendi’s Universal Music Group, Sony and Bertelsmann’s jointly owned Sony BMG Music Entertainment, and the Warner Music Group — each quietly negotiated to take small stakes in YouTube as part of video- and music-licensing deals they struck shortly before the sale, people involved in the talks said yesterday. The music companies collectively stand to receive as much as $50 million from these arrangements, these people said…

The deals that the music companies struck for stakes in YouTube should help to shield Google from copyright-infringement lawsuits.

Stay tuned for more…Google on deck for Q3 earnings report today!

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