For the last twenty-four hours we’ve been reporting a nearly non-stop stream of facts (and some speculation) about the new, unnamed News Corp./NBC Universal joint venture to launch later this year. First the rumor, then the confirmation (and press release), then our real-time, undigested notes on the media/analyst call.
Here’s a summary of what we know so far, which doesn’t suggest this thing will be a winner. And since the company is yet to be named, Google’s inside moniker for it, Clown Co., may stick if they’re not careful.
For some months, at least since the Google-YouTube acquisition, a number of TV networks have been discussing the creation of some sort of alternative to YouTube. News Corp. in particular was incensed by the fact that yet another company was launched on the back of their MySpace property, and was showing copyright-violating clips of news Corp. content. When they realized just how valuable YouTube was ($1.65 billion in Google stock), they started serious discussion around building a clone (and at this point, sources inside of the networks were talking about a clone, which is much different than what they are now saying they’ll launch).
But in the meantime, Google got serious about negotiating with the networks to get their content about YouTube. Everyone waited for the first big network to fall, assuming the rest would follow. As the year drew to an end, though, no deals were done. Nobody blinked.
Then the counter-punches were thrown. Viacom issued over 100,000 DMCA takedown notices to YouTube and then promptly sued them for $1 billion six weeks later. In the meantime, NBC’s brand new CEO, Jeff Zucker, slammed YouTube in his first days on the job. Zucker used language that was so similar to Viacom’s, that it appeared to be an orchestrated strategy between the two companies.
News Corp. and NBC now say that negotiations continued during this period, with various networks joining, leaving, or sitting on the fence. The key to getting to a deal done was getting the right distribution partners in place so that the venture could claim a very large audience. This week, the distribution partners came to agreement with the networks. AOL, MSN, MySpace and Yahoo (Google’s primary competitors, plus News Corp.’s MySpace) were all on board.
Facts About the Company and Service
There are still a lot of “unknowns,” even after the media/analyst call today. The new company is a 50/50 joint venture between News Corp. and NBC Universal. It will be located in New York and Los Angeles. NBC Universal’s Chief Digital Officer, George Kliavkoff will transitionally head up the new entity at launch, with permanent management coming soon. Some large initial advertisers have also been announced (Cadbury Schweppes, Cisco, Esurance, Intel, General Motors, Royal Caribbean).
The service will feature content from NBC and News Corp., and user-generated video. Both television as well as film titles will be available. Some content will be free, some will cost iTunes-like prices. The company will welcome other content providers, but they said they would be hesitant to add more equity partners to the joint venture.
There will be no centralized site for the service. Instead, content will be available through distribution partners, who will also receive a small share of advertising revenue. The company also said they will be looking to add many more distribution partners, and users will also be able to embed content (along with advertising) directly into their sites.
Many shows, such as American Idol, will not be available since they are not under the control of NBC or News Corp. Shows that are included will become available a few hours after they are first broadcast.
Pricing (and what is free) is still very unclear, as is exactly how advertising will work. At the very least, users can expect to be able to watch streaming content on demand from the service. This in itself will be compelling for many users, although with mandatory advertising simply recording shows on Tivo, or using pirated content, will provide a superior user experience.
Broken Messaging and Wasted Press
A number of red flags were raised during the media/analyst call today. The general attitude of Peter Chernin and Jeff Zucker was joviality, bordering on arrogance, and a number of times laughter broke out on the call. One example is when a reporter from MSNBC, when asking a question, started with “Hi Boss” (referring to the fact that NBC owns the property). For the most part, the reporters who were allowed to ask questions (we were not) were throwing softballs.
The two key messages Chernin and Zucker were selling were (1) a focus on respecting copyright, and (2) the fact that they were creating what they called “the largest advertising platform on earth.” That may be good messaging to stockholders, but it isn’t what the public cares about.
I think a better approach would have been to focus on the user experience, but this was hardly mentioned (except at one point when Zucker said “we are shocked at the willingness of the consumer to sit through the whole show with ads on NBC.com”). It’s either arrogance or it’s blindness to the reality of this Bittorent and YouTube world. Either way, it suggests they are in over their head.
There are really big challenges ahead for this company. First, the fact that only two networks joined is a really bad sign. Viacom at least should have been willing to join. Second, this group has little experience in creating web applications, and no experience building the kind of stuff, like YouTube, that users get seriously passionate about. Third, the track record of major media companies working together to deal with this kind of viral attack on their business is not good. As Valleywag pointed out today, EMI, BMG, and Sony Music banded together in 1999 to deal with the Napster situation and created Musicnet, which was a dismal failure and was named by PC World as one of the worst tech products of all time.
Today was just a placeholder announcement for this yet-to-be-named company, and more details will certainly emerge soon that could show this in a new light. But for now, Google/Youtube, who have been referring to the project as Clown Co. privately, doesn’t look to be in any trouble. Without a name, a lot of the press today was wasted. My recommendation to interim head George Kliavkoff: name this thing fast, before “Clown Co.” becomes more than just an inside joke at Google.