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US broadcasters hatch plot to undermine YouTube

Journal: UGC site planned as direct competitor

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Comment Content monopolies like the major US broadcasters, will always want to maintain their monopolistic control of a market, but in every round of content innovation they are pretty much doomed to fail.

It’s hard, for instance, to sell advertising among videos on a web site, if your main ambition is to stop it interfering with your day job, which in the case of the broadcasters is making money from what may be an outdated business model.

Which is why, when the Wall Street Journal brought to everyone’s attention this week that four of the major TV networks are planning a UGC site that also shows broadcast video as a direct competitor to Google’s YouTube, we thought “that won’t work.”

It’s not just a case of the networks, Fox, Viacom, CBS and NBC Universal, doing their own thing, but doing it together, in a “design by committee” format that rang the death knell for such enterprises as Movielink.

This is the absolute worst case scenario. Rivals that compete, but which collectively act as a legally approved cartel, carving up the market, in order to control the route to market. They will make lots of collective claims that YouTube is uncontrollable, that it allows pirated video, and that it doesn’t care enough about its intellectual property. But this is really code for “this is a channel that we don’t control, and that means other, smaller operations can use it, and that gives them a chance to be as popular as us.” And if you are a major US broadcaster, that’s bad.

Even though these same studios have given YouTube some rights to their broadcast TV series, they ensure that they are taken down after a certain time, and anyway they are mainly promotions, this way they can protect their DVD revenues on these properties. Independent content owners, for instance, that cannot get the blessing of a rich TV network, will want their content up permanently at YouTube, giving it an advantage over broadcast material, an advantage that it sorely needs.

But of course if the plan is to bring as many people to this combined web site as possible, and get all the search engines in the world pointing at it, and then NOT deliver the correct video content, it’s doomed to eventual failure.

Instead of them figuring out the right business model in a committee, they need to see that the popular web sites like YouTube have already figured it out. Either they should copy YouTube individually, or work with companies like YouTube, as two of them, NBC and CBS, have already done.

The talks are still secret, inconclusive and do not involve ABC and its parent Disney, which was the first to break the deadlock on online content, by licensing iTunes with some of its TV series, just over a year ago.

Apparently Fox proposed the use of its MySpace social-networking site as a host of the video. While this was naturally turned down, it might not have been if Fox had allowed each of the broadcasters an opportunity to hold significant shares in MySpace. But of course, infighting and design by committee would have eventually killed MySpace, so it’s best that it wasn’t accepted.

Our prediction is that by the time these broadcasters reach agreement, a whole new raft of online video services will have emerged, and new content companies with different priorities, will be providing content to sites like YouTube, content that is not tied to a broadcasting schedule.

Copyright © 2006, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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