Google announced today that it has acquired YouTube.com for a hefty $1.65 billion in stocks. This marks Google’s biggest acquisition to date and would give Google access an estimated 50 million users worldwide. YouTube was founded just over a year and a half ago by Chad Hurley, Steve Chen, and Jawed Karim and has since grown to be a household name for countless millions of families around the world.

The basic gist of site is that users can register for free to host and watch countless user-submitted video. YouTube offers practically the entire gamut of the video spectrum; everything from video-blogs, to mindless teenage ramblings, to movie and show clips can be found on the site. According to Alexa is one of the fastest-growing websites currently on the Internet. Some argue that they are well on their way to outpace MySpace.com within a year. Approximately a 100 million clips are viewed every day on YouTube, with another 70,000 new videos being added daily. Being such a success, it’s little wonder that they have been getting offer after offer to be bought.

Google wasn’t the only company after YouTube; offers to purchase the Internet start-up have ranged from Microsoft, to Yahoo, to Viacom, to name a few. Under the current agreement, YouTube would retain its identity as well as its headquarters in San Bruno, California. According to CEO Chad Hurley, the company wished to stay as independent as possible within Google.

The acquisition of YouTube would enable Google to reach approximately 400% more users than it would on its own with Google Video, which has failed to gain a significant foothold. Besides from this obvious benefit to Google, YouTube would also gain from the vast financial backing of Google to help them fight lawsuits, like those that have risen up in the past concerning the posting of copyrighted material. Additionally, the extra monetary backing would also enable YouTube to develop more effective tools to regulate their content and to actively prevent such problems before they arise.

One of the main problems that YouTube had, and presumably still has, is its business model—it doesn’t really exist. Some estimates state that YouTube spends about one million US dollars a month on bandwidth costs alone, and with the increasing popularity of the Internet phenomenon, the problem is bound to get worse.

From a financial stand point, YouTube was a mess; not only does it cost a fortune to host, there really isn’t a steady source of income either. Members are currently not asked to pay for the services offered and the only visible source of revenue might very well be from the advertisements on the site.

Now that Google owns the start-up, it is likely that they will soon start to implement a more stable form of income. If Google Video is to serve as an indicator, it is likely that they will soon start to offer pay-per-view type of services. Google might also decide to implement better targeted advertisements: for example, they might force their users to watch a short commercial before the start of a clip.

Ultimately it will be up to Google and YouTube to determine the direction of the site and how to start making a profit from it. Looking at the current visitor trends, however, it’s only reasonably to assume YouTube will be around for quite some time.