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This is not good news, imo, and not just because Google will be more aggressive about policing copyright infringement. Looking down the road a little, I think Youtube was blazing the trail for the future of mass-media. I was hoping they'd go public and eventually be a strong competitor to Google & Yahoo on that front. Competition is good.
You Tube couldnt keep up with growth, their service was pretty poor but this gives Google some gain in advertising revenues as well as a much improved video offering.
I think they will work some deals and throw some cash with content providers on copyrigtht issues but the whole thing is risky as they cannot keep up with user base video uploading copyright videos. I think you'll see some lawsuits now that Google has the money to pay Especially from the networks...
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