NBC Piles On Google – YouTube Strategy in Question

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Daily Crunch: Fishscale Edition

NBC’s new CEO Jeff Zucker didn’t waste any time before stirring things up a little. The Financial Times is reporting that he trashed YouTube, using words very similar to those chosen by Viacom a week ago when they demanded YouTube remove over 100,000 video clips. The words, in fact, are so close that the two events almost seen orchestrated:

“YouTube needs to prove that it will implement its filtering technology across its online platform. It’s proven it can do it when it wants to,” Mr Zucker said, referring to the site’s controls to block pornography and hate speech. He added: “They have the capability. The question is whether they have the will.”

It’s clear that YouTube has the ability (like their competitors) to filter out copyrighted materials right now, and they are choosing not to do so. That would gut YouTube’s core content and that isn’t going to happen without a judge getting involved. It’s also clear from all the posturing by the television networks that they want their content to appear on YouTube. It helps television ratings, and they want the online revenue.

So the question is, if both sides want it, why hasn’t it happened yet? The infamous television network joint venture to compete with YouTube hasn’t, and probably won’t, materialize. YouTube has no competitor with enough market share to argue that they are a viable alternative. These companies need each other.

The answer may lie in the amount of revenue that can realistically be generated from these clips. If users can be convinced to watch a video advertisement or two before a clip, the money may be there. But simple display ads around a video just won’t generate enough money to make the networks happy. A $1 CPM generates only a tenth of a cent per view in revenue. Multiply that by ten and you still have only a cent. Television networks are used to getting $0.30 and more in commercial advertising per viewer for a hit show.

Google obviously made promises early on that it couldn’t keep. We’re hearing off record that the TV companies’ biggest frustration with the negotiations is that Google has repeatedly made and then pulled offers. It’s clear that Google is still trying to figure out a model they can live with. That may not happen.

Back to NBC, keep an eye out for their new social networking products. It was mentioned in a different FT article on Zucker, who “noted that NBC was planning to roll out social networking applications across its internet properties in the next few weeks.” This is consistent with earlier reports on this as well – see here and here.

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