Catching Google's YouTube won't be easy
Can six major media companies team up to make online video legit? Fortune's Adam Lashinsky spotlights the difficulties that NBC and News Corp. will face.
SAN FRANCISCO (Fortune) -- The likelihood of success of the latest YouTube killer, the hydra-headed industry joint venture led by News Corp. (Charts) and NBC Universal, can probably best be ascertained by counting the number of companies in the news release. I get five - News, NBC, MSN, AOL and Yahoo (Charts) - or six, if you include MySpace, which News Corp. owns. It's difficult enough for an incumbent to take on a scrappy pioneer. But six? Not likely.
For those who missed the news last week, the media and entertainment companies will start a new video site that will run content from the two organizers and be supported by advertising. They'll also supply content and a video player to their partner sites. The top honchos flat-out deny that the unnamed company that doesn't yet have a management team is a response to YouTube - which is how you know this new entity is a direct and panicked response to YouTube.
YouTube, you see, is the place where the kids - and everybody else for that matter - go to see videos, including work originally produced at NBC and Fox (a News Corp. unit). Getting their content off YouTube, where it doesn't belong, has become a major preoccupation of the industry stalwarts and is why Viacom (Charts) recently sued Google (Charts) for an Austin Powers-inspired $1 billion. Viacom claims Google isn't trying hard enough to honor so-called take-down requests when Viacom finds its content on YouTube. (It's also arguing that it can't even efficiently find its videos on YouTube, making it difficult to request take-downs, but I digress.)
Wait a second, I should have lingered on the fact that five or six industry heavyweights got together to announce an initiative that doesn't yet have a name or a CEO or a definitive start date, other than this summer. The companies say they announced now because they had reached critical mass in terms of participation. They still hope Viacom, CBS (Charts), Disney (Charts) and even Google will sign on to license their video player.
But they felt compelled to talk about the venture now. The Wall Street Journal reported that the group had been wrangling over terms for 15 months. I heard they'd been in discussions in earnest at least since Google announced the YouTube deal. That was six months ago, showing that NBC/News is moving at old-media speed, not Internet speed.
Catching YouTube is a quixotic task in part because when YouTube was a mere trifle it was willing and able to bend rules the biggies are not. Six months ago, for example, Microsoft (Charts) launched an attack on YouTube in the form of a "closed beta" (meaning you needed permission to join) called Soapbox on MSN Video. A month ago the site was opened to the public. Last Thursday, Microsoft quietly kicked Soapbox off its soapbox, limiting the site, again, to invitees only.
Why? Because Microsoft hasn't perfected its filtering technology enough yet to keep pirated videos off the site. Filtering technology raises some thorny questions. For example, a Google lawyer recently told The New York Times its screening process isn't yet up to speed. Should the don't-be-evil company allow any videos to be uploaded to its site if the real possibility exists for pirated videos to find their way there, no matter what the fine points of the law say?
For what it's worth, the companies may find a ray of hope. Despite what my friend Justin Fox wrote recently in Time Magazine, content really is king. As such, there's every reason to believe that no matter how badly the new consortium screws up its implementation, consumers will go to sites that offer entertaining fare.
As an example, last Thursday night "The Daily Show" with Jon Stewart did a really funny skit on the Viacom-versus-Google brouhaha in which Stewart and comic Demetri Martin gently mocked both sides. (Viacom owns Comedy Central, where "The Daily Show" appears, and Stewart demonstrated his independence by giving voice to the tired argument that the promotional qualities of YouTube are a good thing for owners of intellectual property -- even if YouTube is facilitating the theft of the their content.)
I wanted to show the clip to someone the next day, and so first I searched YouTube. I couldn't find it there. Take-down notices seem to work. I did find the clip, here, at the next site I searched: Comedycentral.com. When the clip was less than 24 hours old I had to watch a 30-second commercial for a Jeep Wrangler, and the clip had been viewed about 22,000 times at that point. By Sunday night, the clip was commercial-free and had been viewed 104,000 times.
It's still early days for Web video. But at least some owners of high-quality content already appear to be learning how to make money from their own content - and stopping others from stealing it.