In a deal that makes last year's $580 million MySpace purchase look like chump change, Web search giant Google announced Monday it will buy YouTube for $1.65 billion in stock.

The deal unites the Web's most popular search engine and its biggest video-sharing site, with 2-year-old upstart YouTube claiming an audience that watches more than 100 million clips a day. The joining of the firms had been rumored for several days, and earlier on Monday (October 9) each had announced revenue-sharing deals with major media companies, including CBS, Sony-BMG, Universal Music Group and Warner Music Group, according to the San Jose Mercury News.

Those agreements will allow YouTube and Google Video users to watch music videos and other media for free, with advertising dollars to be shared between the video site and the copyright owner. The agreements paved the way for the Google purchase by dealing with one of YouTube's stickiest issues, and the one that had scared away some previous buyers: the fact that much of its content consists of illegally posted or traded material.

According to Bloomberg News, the YouTube deal will push Google up from third to second in total visitors among U.S. Internet companies, with a combined 101 million visitors in August. The search engine is currently behind Microsoft's MSN site and #1 Yahoo!