When it comes to online video, large media companies are realizing that jilting
may be an option after all.
The Wall Street Journal
reported that talks intended to allow Google's YouTube access to the media giant
popular clips -- from programs like
The Late Show with David Letterman
-- had unraveled, citing sources familiar with the deal.
Disagreements between the two companies included how long the deal would run, and while talks could always resume at a later date, the two companies are planning to collaborate only modestly for the time being.
CBS' cold feet present a particularly tricky hurdle for Google's ambitions to move into new markets beyond its core search business because the network seemed the most willing of the old media guard to work with the search giant. Only in November, CBS had said that YouTube was helping to grow the audience for its network TV shows and that it had therefore uploaded clips itself to the popular video sharing site.
CBS also was reportedly working an a deal to secure radio ad space -- another medium Google has been pursuing, with disappointing results thus far -- which will now cool off.
CBS' change of heart comes on the heels of news that one of Google's most strident traditional media critics is upping the ante in the battle to profit from online video.
announced that it had arrived at a deal with video-sharing upstart Joost to distribute the media behemoth's vast stockpile of video clips.
Highly anticipated Joost, now in beta testing, is the new venture of Niklas Zennstrom and Janus Friis, who showed their mettle by selling Internet-phone service Skype, which they founded, to
for $2.6 billion.
News of the deal comes at a time when shares of Google have stopped rising as investors gauge the company's progress in the markets beyond search that it's pursuing. Google now trades at $472, off January highs of $513 and close to where it was in October 2006. Viacom, meanwhile, closed Tuesday at $40.41. Shares of CBS trade at around $32.
Viacom, owner of brands MTV, VH1, Nickelodeon, Comedy Central and Paramount Pictures, announced the Joost deal barely two weeks after it demanded that Google yank 100,000 videos from the search giant's popular YouTube video-sharing site and amid continued criticism of how grossly Viacom had blundered in so doing.
On Monday, columnist Jeff Jarvis wrote an article in U.K. newspaper
arguing that Viacom's decision to pull its clips from YouTube would essentially shut the company out of getting new viewers for its TV shows.
Younger audiences look to the Internet to preview shows they might be interested in instead of channel-surfing on TV, Jarvis argued.
And though YouTube remains the most popular video-sharing site, it is hardly the only one. A swelling number of start-ups that include Brightcove, Revver, Break.com, Twango and Sharkle, are now part of the video-content game.
Many of these companies can offer more generous revenue-sharing terms -- and more attention to the copyright protection vital to large media companies, such as Viacom.
For example, while details of the Joost deal were not disclosed, Viacom has received a hefty two-thirds of the ad sales and other compensation in similar deals,
The Wall Street Journal
With the growing number of video-sharing sites, traditional media companies -- many of which have been
infuriated by Google's behavior as of late -- may also have a way to turn the tables on YouTube.
Video-distribution deals aren't necessarily exclusive, meaning that content providers could decide to make deals with several video-sharing sites and exclude YouTube. Such agreements would freeze YouTube out of the material that has been among its biggest draws, and also give ammunition to YouTube's competitors.
Of course, YouTube's advantage is its enormous popularity. The site is the fifth-most-visited on the Internet, according to Alexa.com. Additionally, because it is such a phenomenon, the site can now rely less on posting clips of TV and film celebrities to lure users than it did a year ago as a relative unknown.
YouTube has also developed a loyal base of users who upload popular content that they themselves create, and Google is working on finding a way to share the advertising spoils with them -- something that some other video-sharing sites already do.
Still, what's apparent is that traditional media companies are becoming increasingly aware of and confident about other options if they don't like what Google has to offer.
And while having to rely on Google seemed inevitable just a few months ago, Viacom's decision to pull its content from YouTube and its Joost move may embolden other players, including CBS, to consider different routes, too.
In fact, while content owners are frequently seen as being at the mercy of new technologies that are upending their businesses, it may be the large media companies that are in the driver's seat when it comes to the Internet, as compared with an older medium such as cable.
That's because content owners had to work with the company that wired each house if they wanted to deliver their content to it. But now the Web offers more options.
"There is no question that content owners are even more powerful when it comes to the Internet than in traditional cable or satellite television," says Adam Berrey, the vice president of marketing and strategy for Brightcove, a video-sharing company that counts media stalwarts such as
New York Times
Warner Music Group
among its partners.
Also, Viacom's deal with Joost does not preclude it from seeking additional distribution partners to maximize the value of its content.
"We're interested in distribution of our content on as many platforms as possible, provided we can operate in a secure environment," Viacom CEO Philippe Dauman told the
"This assures any potential partners that we're open for business and that we're able to enter into transactions with companies that respect our content and the considerations of our business," Dauman said.
In other words, Viacom is looking to work with almost anyone -- except Google.