Is Fox a Factor in the Google/YouTube Deal?

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Notably absent in the slew of content deals announced by YouTube today is any announcement of a Fox relationship. That’s because there isn’t one.

A source inside of Fox, which owns MySpace, tells us that they were surprised that Google was aggressively pursuing a deal with YouTube, given Google’s nearly $1 billion advertising relationship with MySpace. MySpace views YouTube as a competitor, and recent Hitwise data shows Myspace Video quickly catching up to YouTube.

Fox is in a very unique position vis-à-vis this deal. News Corp chief operating officer Peter Chernin recently told investors that 60-70% of YouTube traffic comes from MySpace. While direct integration with Google could certainly make up for part of this traffic were MySpace to shut off YouTube access, it would still be a huge blow. And Fox is also the owner of much of the copyrighted material contained on YouTube.

I also wonder if Fox, Universal, Viacom, NBC and other large copyright holders aren’t considering joining forces and simply creating a new YouTube competitor. Instead of entering into revenue share agreements with YouTube/Google, they could simply pull their content, create a YouTube clone quickly using Adobe’s Flash technology, and make their content available there instead. YouTube would be dead in the water (some estimates suggest that up to 80% of YouTube’s traffic is generated from copyright infringing content). A quick perusal of YouTube’s current Most Viewed videos certainly shows a lot of copyrighted material.

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