YouTube's Nightmare Scenario Falls Flat

Rather than an inevitable reckoning, Viacom's decisions speak to how dramatically the balance of power has swung between itself and YouTube. A year ago, the video site may well have needed big Viacom titles to lure users who would otherwise not see the appeal of its offbeat user-generated content. Now, it's happy to let Viacom walk if it doesn't like its price, with little consequence to its own well being.

In March, data from research firm Hitwise showed that YouTube traffic continued to boom in the weeks after Viacom pulled its content. Moreover, Viacom titles were nowhere near the top of the list of search terms driving traffic to YouTube's site. Viacom's growing interest in past slights may well be driven by the prospects of lessening relevance in the future.

A lot of this also seems to be about ego. Viacom's decisions are famously shaped by Sumner Redstone, its larger-than-life chairman who last made headlines for his unusually public firing of actor Tom Cruise.

Google CEO Eric Schmidt's feisty comments last week, when he told a group of investors that Google likely was arrogant in dealing with the media old guard, must have come across as anything but soothing.

Far from landing a billion dollars, Redstone will likely walk away from the YouTube tangle with a newfound sense of the diminishing importance of his esteemed Viacom in the new media landscape. But even if he somehow prevails, Google shareholders should be relieved that this long anticipated bang turned out to be such a whimper.

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