SAN FRANCISCO — Google Inc. appeared Friday to be the latest suitor vying for the affections of YouTube Inc., a match-up that would unite the search giant's technical and advertising might with the online video pioneer's rapidly growing audience.
Since it debuted last year, YouTube has been a new-media darling, fielding proposals from Viacom Inc. and News Corp. But YouTube Chief Executive Chad Hurley has said repeatedly that he prefers to keep the company independent with an eye toward an initial public offering.
That may prove more difficult than YouTube's skyrocketing popularity would suggest. The company has drawn threats of lawsuits from music labels and TV studios for not adequately blocking copyrighted works. Meanwhile, the 60-person start-up is struggling to make enough money to offset its bandwidth costs, which are climbing as YouTube serves 100 million videos a day.
"They are just not able to keep up with what they've created," said Josh Bernoff, an analyst with Forrester Research. "They don't have the necessary staff to be able to move ahead here, especially with the threat of a lawsuit looming over them. They need to find ways to rapidly generate more advertising revenue, which Google is going to be terrific at."
Talks between Google and YouTube were first reported by technology blog TechCrunch, which valued a potential deal at $1.6 billion.
Any negotiations could still fall apart. Other suitors also could offer more money.
Google and YouTube declined to comment Friday.
A deal would mark the first time Google, which prefers to fill in the gaps in its product line with small acquisitions, has bought a technology company that makes a competing -- and more successful -- product. It also would be a major acknowledgment by Mountain View, Calif.-based Google that its own video service, launched in January, couldn't keep pace with the San Mateo, Calif.-based upstart, founded by Hurley and Steve Chen.
YouTube received 46% of all visits to online video websites in September, compared with 11% for Google, according to Hitwise, a market research firm.
"Google, no matter how hard it has tried, has been unable to unseat YouTube," said Dmitry Shapiro, CEO of Veoh Networks, a video-sharing service with investments from Michael Eisner. Despite Google's search-engine traffic, he added, "consumers continue to prefer YouTube."
