YouTube Gave Equity To Record Labels On The Morning Of The Google Deal

from the oh-really? dept

Remember how hours before the Google acquisition of YouTube was officially announced, the company first announced deals with a bunch of record labels. While everyone assumed these were basic content deals, the NY Times is now reporting that it actually involved giving those companies an equity stake in YouTube, on which they made a nice profit on a few hours later when Google made the announcement that they were buying the site. That, obviously, helps explain why YouTube wasn't included in the lawsuits Universal Music announced on Tuesday. However, something about this doesn't seem right. The article notes that the labels and YouTube rushed to get a deal signed just hours before the Google deal was signed "in part so that it could benefit in the jump in YouTube's value." Of course, that sounds like something of a scam. By that point, it was clear that YouTube and Google were signing a deal, and YouTube basically gave the labels a super favorable deal so they could make quick millions hours later when Google bought YouTube at the high valuation Google gave the company. Sounds like a case where YouTube basically gave the labels Google's cash before any official deal was completed.

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  1. identicon
    Egat, 19 Oct 2006 @ 8:57am

    No it's not even close to illegal

    Hooray for posting without reading!

    from the SEC link:
    selective disclosure of information by publicly traded companies

    Let me just be really clear here. YouTube does not fall under SEC regulation because they ARE NOT A PUBLICLY TRADED COMPANY.

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