Twitter is buying YouTube, according to people familiar with the matter, the companies confirmed to Recode.
The deal is worth about $1 billion and will allow Twitter to build out a mobile and video service, said one of the people, who asked not to be identified because the transaction is private.
Twitter will pay $1 per 1,000 YouTube subscribers, and the company plans to use its $1 revenue stream to fund growth for YouTube, said the person.
A YouTube spokesperson declined to comment.
The price tag does not include the cost of acquiring the company, which is owned by Facebook for $38 billion, and has been a focus of recent discussions.
Facebook acquired Instagram in 2016 for $3 billion, but the company has struggled to monetize its social network.
Twitter has also struggled to make money.
Its stock fell $9.40, or 1.2%, in after-hours trading.
Twitter shares rose 4% in after hours trading on Thursday.
“This deal marks the beginning of a new era for YouTube,” said Justin Pinto, an analyst at Wedbush Securities.
“We think this will help YouTube reach a bigger audience.
We expect it to continue to grow.”
Twitter has not released revenue forecasts for the deal, which would take effect in 2019.
Twitter’s stock has gained more than 17% this year.
The company has a market value of about $2.6 billion.