Google has announced that it will acquire the video sharing web site YouTube for $1.65 billion in stock as predicted by informitv. Following the acquisition, YouTube will continue to operate independently to preserve its brand and community and Google will retain its own video search function.

“This acquisition is an exciting next step in terms of our thinking about the evolution of the internet and video and one of many investments that Google will be making to ensure that video has its proper place in people’s online lifestyle on the internet worldwide,” said Eric Schmidt, chief executive of Google.

He told analysts and reporters: “We believe that the combination of Google and YouTube will create this very new and interesting global media platform for users, content providers and advertisers all around the world.”

Chad Hurley, co-founder and chief executive of YouTube, observed: “Right now we’re in the middle of a shift in digital media entertainment. Users are now in control of what they watch and when they want to watch it and they decide what rises to the top, what’s entertaining.”

“By joining forces with Google we’ll be able to sharpen our focus on this vision to create a new media platform for consumers and partners to distribute their media worldwide,” he said.

Sergey Brin, the co-founder of Google, with responsibility for technology, said: “It’s hard for me to imagine a better fit with another company. This really reminds me of Google just a few short years ago.”

In recent meetings the two companies have identified a number of ways in which YouTube might be assisted by Google, including the application of their advertising and search technology.

Both companies were quick to stress their respect for copyright owners. YouTube is developing content identification systems that will use keywords and audio fingerprints to allow rights owners to identify their copyright material.

“Most people believe that this is just the beginning of an internet video revolution and there will be many ways in which video gets uploaded, monetized and copyrights respected, which is another key component of the YouTube vision and ours as well,” said Eric Schmidt of Google.

He denied that this would be the end of Google’s own video site, saying that “Google video is a very valuable part of the Google experience and in fact is going to become even more integrated with Google overall”.

For now, the YouTube brand will remain as a separate site. “We have decided that it makes perfect sense to continue YouTube as a brand and as a community as a separate business operation of Google,” he said. “We think that the brand has value, we think that end users care a lot about it, and we want to preserve that.”

Earlier in the day, YouTube announced content licensing agreements with Universal Music Group, Sony BMG and the CBS Television Network.

The two music deals follow a landmark agreement with Warner Music Group, allowing not only the distribution of a variety of music material on the web site, but also the incorporation of certain music recordings in videos uploaded by users.

It marks a major shift in attitude by major media companies towards the distribution of user contributed material incorporating copyright works.

Thomas Hesse, president of global digital business at Sony BMG said it “represents a fascinating new way to deepen the relationship between our artists and their fans”.

CBS will offer YouTube a variety of short-form programming from its news, sports and entertainment divisions on a daily basis and the two companies will share advertising revenue.

CBS will use the new YouTube content identification and reporting system to identify its copyright material on the site and have the opportunity to remove it or at its sole discretion allow it to remain, sharing any revenue from associated advertising.

“Today’s agreement demonstrates that YouTube has become a revenue-generating distribution channel for major networks and other media companies,” said Chad Hurley of YouTube. “By partnering with YouTube, media companies can now have a two-way dialogue with viewers who can provide feedback about what they find entertaining.”