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Viacom sets off content conflict

The company wants to be paid when its videos are posted on YouTube, calling into question the ties between big media and new media.

February 03, 2007|Dawn C. Chmielewski | Times Staff Writer

Viacom Inc.'s demand Friday that YouTube remove more than 100,000 clips from the popular online video site is more than brinksmanship at the bargaining table.

It's a battle of the brands.

The entertainment conglomerate's insistence that YouTube remove such coveted content as highlights from "The Daily Show With Jon Stewart" and "The Colbert Report" signals that it believes these brands have enough cachet to attract an online audience, with or without YouTube. And if YouTube wants the clips, Viacom wants it to pay for them.

The move highlights the growing tension -- and interdependence -- between online video sites and traditional media companies. The latter dislike having their copyrighted material posted without permission, but they do like the extra promotion it brings. YouTube had about 29.6 million visitors in December, according to ComScore Media Metrix. And YouTube, owned by Google Inc., relies on the traffic that established entertainment properties bring to sell ads.

It's a fragile ecosystem, and Viacom -- owner of Nickelodeon, Comedy Central, MTV Networks, Black Entertainment Television and Paramount Pictures -- may be disrupting it. Viacom is among four major media companies reportedly in talks with News Corp., CBS and NBC Universal about creating a video website to compete with YouTube.

"This move could have vast and far-reaching consequences for online traffic, brand power and business models," said Rachel Happe, digital business researcher at IDC. "If Google no longer has access to the enormous quantity of high-value Viacom video content, the value of its service to consumers and advertisers is diminished."

Happe said the Internet had matured to the point where individual brands -- and in this case, a media powerhouse -- want to control more of the traffic, serve their own advertising and own the customer.

"It's the fight over consolidation versus disaggregation and brand-centric behavior online," Happe said. "The sad thing is the consumer doesn't win out. Ideally, Viacom and Google would have come to some agreement and the video could have been in many places."

Viacom executives said the company wasn't trying to block new forms of online distribution. It offers downloads through Apple Inc.'s iTunes store and partners with mobile phone carriers.

"Our stuff costs a lot of money to make. It's made with the best people in the world. It generates huge audiences. So people should be prepared to pay for what it's worth," said Michael Fricklas, Viacom's executive vice president and general counsel.

"We're in the business of making our content available through all methods of distribution. YouTube needs to pay for it as well."

David Eun, Google's vice president of content, said Google and YouTube still hoped to reach a deal with Viacom. Viacom was the first partner in an experimental program last summer to distribute its content across Google's ad network.

"It's still so early that there aren't established models for how to do this," Eun said. "We're still trying to figure out a relationship that works for both parties -- what works economically, what works from all sorts of different vantage points."

Forrester Research media analyst James McQuivey said other television networks, including Viacom's former corporate sibling, CBS Corp., have struck deals with YouTube.

CBS, for example, reported that 300 of its video clips averaged nearly 1 million views a day and built an audience for personalities like "Late Late Show" host Craig Ferguson and Dr. Phil. YouTube has also reached deals with Warner Music Group, Vivendi-owned Universal Music Group and NBC Universal.

"It really comes down to, is a two-minute clip viewed online a substitute for watching the show, or is it an enticement to watch the show?" McQuivey said. "Is it substitution or promotion?"

McQuivey said Viacom, whose cable networks command a premium, is making a statement that its content similarly holds value even when distributed online.

"The brands under Viacom, these are all things you have to pay for. They have some of the highest-traffic videos on your site. So they're probably in a unique position. I don't think if PBS had gone over to complain, they'd have the same leverage."


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