Google is buying Youtube – the biggest online video sharing site, for $1.6 billion. But why would it want to? It already has Google Video

Get more market share

Youtube has between 40-45% market share of online video sharing. Google Video has nothing like that. So combining Google video and Youtube will mean that Google almost dominates the video sharing market.

Why pay for advertising?

Google paid $900 million in a deal with Myspace to sell advertising space there. By buying youtube it can put all the ads it wants – and keep all the profits. At the moment Google adsense ads are on Youtube, but Youtube currently will get 70-80% of the profits. Now that Youtube is Google’s, the big G can keep 100% of the profits itself.

The lawsuits

Many people recon the reason Youtube hasn’t been sued yet is because they have no money to pay out. But then, Google video has lots of copyrighted material, and Google has lotsof money – but where are the lawsuits against them?

And hey, this is Google – the guys that decided they would scan thousands of books and display (parts of) them online! And they got away with it!

Also some big name companies such as Warner music have already done deals with youtube. Rather than keep setting lawsuits against each other etc they work with each other.