It's official: Google is buying YouTube. The price is $1.65 billion in Google stock.

Is this a good deal? People are saying that the price looks steep, but the opportunity for selling ads seems pretty enticing. YouTube has a high garbage-to-fun ratio, so I never go there, unless I know what I am seeking. For people like me, the bigger news today may be that YouTube will be getting more high-quality content legitimately:

In a prelude to the acquisition announcement, YouTube early Monday announced agreements with Vivendi SA's Universal Music Group and Sony Corp. and Bertelsmann AG joint venture Sony BMG to make their music videos available through YouTube and to allow consumers to use music from the two companies as soundtracks for their own videos on YouTube. The video site also signed a content and ad-revenue-sharing agreement with CBS Corp. related to video from CBS Television Network, Showtime Networks Inc. and CSTV Networks Inc. Google separately announced agreements with Warner Music Group Corp. and Sony BMG to make music videos and other content available for free through its video service and on partner sites.

By the way, this looks like a home run for Sequoia, the VC firm that owns 30% of YouTube's stock.

UPDATE: Paul Kedrosky is all over this story. My favorite line from Paul's liveblogging of the conference call is in italics below:

Why do this when you have Google Video? My answer. Google Video is going nowhere. Eric puts it differently, saying it has "lots of interesting partnerships", possible the most tepid recommendation I have ever heard.

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