Viacom and Google/YouTube: A temporary setback to future licensing deals

Below is a post from James McQuivey, who has just returned to Forrester as our media analyst after spending a few years in academia. He has the following to say on the Viacom takedown order to Google.

"We just got off the phone with a spokesperson at Viacom, which today issued a demand that YouTube remove more than 100,000 clips from its site users uploaded without Viacom’s permission. A mere 100,000 wouldn’t sound like much compared to the 70 million clips YouTube visitors stream on an average day, except for the fact that Viacom is the parent company to BET, Paramount, and MTV Networks, whose properties include such hot commodities as The Daily Show and The Colbert Report. In fact, ranking number 6 on this week’s YouTube most watched list is the clip of Jon Stewart’s interview with ubergeek Bill Gates tied to the Windows Vista launch. (Watch it here [http://www.youtube.com/watch?v=M4suTsIIBWo] while you still can!)

Viacom reports that recent negotiations with YouTube to arrive on a “fair” way to receive compensation for its intellectual property did not progress and the demand was the only way to prevent further losses. Expect Google, YouTube’s parent, to comply. What remains to be seen is whether they’ll do so with quiet dignity or with a passive-aggressive stall. We expect the former, but recognize that this isn’t just about Google’s desire to hoard its ad revenue. Because CBS and NBC have already signed deals to allow selected clips to be seen on YouTube, Google has an interest in preserving its current pricing model and doesn’t want to let a latecomer dictate terms. Even if that latecomer owns The Colbert Report. 

Is Viacom’s move the right one? Let’s consider the alternative: CBS has had phenomenal success with its YouTube Channel. In November, YouTube reported that with a mere 300 video clips, CBS was averaging nearly a million views a day, promoting CBS personalities like Craig Ferguson and Dr. Phil. Which begs the question – is it better to siege your enemies or wed them? Viacom is arguing for a siege. All of this is complicated by persistent rumors that Viacom, together with other television networks, is considering creating a YouTube competitor. It could be that Viacom is trying to slow YouTube down while it decides whether going head-to-head online is worth its while. 

I expect a licensing deal to be struck – Viacom wants the eyeballs, Google/YouTube wants to avoid setting a contentious precedent that will slow down uptake among the remaining broadcasters and movie studies it hopes to wed.

Let me know what you think,

James

Comments

[Chan]

Viacom's answer to YouTube is iFilm.

http://www.ifilm.com

[Josh Bernoff]

James -- from my conversations with Viacom they say YouTube is impossible to negotiate with -- which in itself is a negotiating ploy. These copyright holders havae to have a fallback position, which in this case is "take it all down." I think Viacom wants to see what YouTube will do.

Eventually, as you say, they'll reach a deal. In the meantime, "take my terms or I won't stop your copyrighted videos from appearing" isn't really a good position for a company like YouTube that aspires to be a "partner" of media companies.

[GMI Blog]

YouTube might be one of the greatest innovative offering on the Internet. Google, Amazon, Yahoo and EBay are also on that list.

[GMI Blog]

YouTube might be one of the greatest innovative offering on the Internet. Google, Amazon, Yahoo and EBay are also on that list.

[Movie Blog]

Yes, YouTube, along with Google, Amazon, Yahoo, Ebay, and don't forget paypal, is one of the few revolutionary sites. I'll be interested to see where myspace is in a couple years, though. Not convinced it isn't a fad.

[Movie Review website]

I think Myspace is definitely a fad. Some other site will come along and do it better. The actual website is pretty lousy as is.

[t.t]

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[Jalipo]

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