|It has become evident that the question of who will rule video on the Web is incredibly tangled. For now, most of the sticky strands lead to Google, and big media companies are trying to figure out whether to fight it or join it.|
The Old Guard Flexes Its Muscles (While It Still Can)
February 18, 2007
By RICHARD SIKLOS
JEFF ZUCKER, the newly minted chief executive of NBC Universal, ventured to the Times Square headquarters of Viacom two Wednesdays ago with Peter A. Chernin, president of the News Corporation. It was not a social call as much as a social-networking call, to see Philippe P. Dauman, Viacom’s chief executive. After all, Viacom had rather publicly ordered YouTube, the Internet’s most popular video-sharing site, to remove thousands of clips of MTV material.
A few weeks earlier, Viacom had also bowed out of a partnership with NBC and the News Corporation to set up their own alternative to YouTube, which was recently acquired by the search juggernaut Google. Not to be dissuaded, their idea is that a Web start-up featuring the broadcasters’ most Web-friendly fare (comedy clips and even whole episodes of their popular shows) could gather a crowd on its own and also be a powerful consortium for licensing content to other destinations around the Web — including, of course, “GoogTube.”
According to people briefed on the visit, Mr. Zucker and Mr. Chernin ran through a presentation on why they thought Viacom ought to rejoin their group. So far, Viacom has not rejoined the venture, and the project’s fate remains unclear. (No love is lost between Viacom and the News Corporation, since the latter snatched MySpace.com from under Viacom’s nose.)
Yahoo, meanwhile, eager to regain some ground on Google, has been courting the media giants to let it distribute their video wares.
YouTube is not standing still. It is trying to curry public sentiment in the same way that cable and satellite operators have done in battles with channels that won’t agree to terms with them: by public shaming.
When I tried to search for a Viacom clip on YouTube, it had not only vanished but had also been replaced by a red banner saying the video had been “removed at the request of Viacom International.”
It has become evident that the question of who will rule video on the Web is incredibly tangled. For now, most of the sticky strands lead to Google, and big media companies are trying to figure out whether to fight it or join it. That already hard question has been complicated by some fresh headaches for Google.
First, The Wall Street Journal reported last week that Google had sold advertising that encouraged pirating of Hollywood movies to a couple of rogue Web sites. While the incident was minor in the context of Google’s huge advertising business, it didn’t help soothe its tense relationship with content providers.
Then, a few days later, a Belgian court ruled that Google’s news-aggregating service, Google News, has been violating copyright laws by providing links to French-language newspapers.
Google took pains to characterize both incidents as the sort that often confront big, fast-growing companies. As a company spokeswoman in London said of the Belgian ruling, “This is an isolated case, and it would be inaccurate to portray Google News as standing in conflict with the publishing industry.”
Yet it’s also not hard to detect a worrying pattern here for Google — and for those who wish to be Google. The company controls as much as two-thirds of the market in search advertising, by some accounts. That has already caused plenty of worry among print publishers who wonder if the benefit of being on Google’s global platform is mitigated by what happens to their intellectual property once Google’s search engines get their robotic hands on it.
The worry widened to include the titans of television and cable programming after Google’s buyout of YouTube late last year. The buyout raised the possibility that Google would extend that advertising dominance into video — a business that is exploding online and for which advertisers already spend some $60 billion on conventional television.
The genius of Google, of course, is that it excels at organizing the world’s information and automatically attaching advertising to search results in an efficient, relevant way. If Google can more efficiently serve ads to people who are, say, watching the Grammys on 50-inch screens in their living rooms, that may add to its dominance.
It is hard not to conclude that the media establishment’s threats to start its own rival to YouTube — as well as Viacom’s yanking of its popular clips from the site — amount to posturing. What it might really be about is securing a lucrative deal from Google that would end hostilities in exchange for guaranteed cash and a healthy split of revenue from any advertising the company derives from their video content.
Google has consistently taken the position that it is the ally of those who create and own content — these latest hiccups notwithstanding — and that its technology can help them make more money online then they could on their own.
But Google’s sheer size and heft — including its rich margins and $140 billion market value — are viewed enviously and warily by media companies. They all wonder: Just how much of that value is coming out of my pocket?
Thus, the issue of making deals with content companies has quickly led to a kind of Catch-22 for Google. As one Hollywood executive, who didn’t want to be identified because of the continuing negotiations, said of Google: “The more content they license, it begs the question: what about all that other unlicensed stuff you’ve got up there?”
To make matters even more complicated, a big focus for media companies right now is to share the wealth with everyone who creates valuable content, not just the pros. YouTube has said that it will follow the trend of other video sites and Web businesses by figuring out a way to give some share of revenue to people whose homemade videos attract the most viewers.
Google’s media partner-rivals are also now asking why Google won’t just voluntarily use its technical prowess to ferret out copyrighted material. (After all, they say, the company seems to keep pornography off YouTube rather effectively.) To drive home the point, MySpace trumpeted just such a copyright filtering feature for videos on its popular social networking site last week.
INTELLECTUAL property law is clear that the legal impetus, for now, rests with the copyright holder to tell a Web site to take down unauthorized material. Indeed, it would be cumbersome to ask every kid with a community site to spend his days policing what the members have posted.
The media giants have a point, however, when they ask why they even have to cajole Google, a self-professed friend, to make nice.
Yet Google and its brethren also have a point when they wonder if the media giants are only hurting themselves by pressing the copyright issue. They point out that their sites have served as great promotional venues — and that they do not charge the media companies a dollar for that help. Moreover, there are no barriers to entry to stop NBC, Viacom or anyone else from starting its own Web video efforts.
What we have here is the most fascinating game of digital chicken the media world has seen. Who will cluck first?