Big Internet Companies (Except Google) Brought Into Line - Thoughts on News Corp/NBC Online Video Deal
The big news today is News Corporation and NBC Universal launching what they claim will be "the largest Internet video distribution network ever assembled", with AOL, MSN, MySpace and Yahoo! as the site’s initial distribution partners. It will launch this summer (US). The benefits obviously work both ways - News Corp and NBC get 4 heavyweight Internet distribution partners (all of the big companies, except for Google) and the likes of AOL and Yahoo! get 'premium' TV and movie content from the entertainment bigcos.
Note that Google owns 5% of AOL, so it's not quite as cut and dried as being a 'GooTube killer' - Internet media is a very complex ecosystem. However it is a little bit like the situation with Enterprise web 2.0, where the smaller companies are partnering and consolidating in order to compete with the incumbents. Except in this case it's not so much 'smaller', as 'less popular' - because Google/YouTube dominates the online video market right now.
Another angle to think about here is that it gives the Internet companies in this partnership (AOL, MSN, MySpace and Yahoo!) much more protection against copyright lawsuits. Take for example this recent report from Forbes, which notes that Yahoo is actively avoiding copyright lawsuits in regards to online video:
"[Yahoo CEO Terry] Semel recalled that he was surprised to learn following last year's World Cup final that Yahoo! didn't have a videoclip of French soccer star Zinedine Zidane's infamous head butting of Italian player Marco Matarazzi during the final match. Yahoo!, after all, had built the World Cup Web sites for soccer's governing body, FIFA. No matter: Yahoo! wasn't licensed to use the clip. So while Zidane's head butt became the most widely watched video on YouTube, Yahoo! decided to take "the longer-term view" and refrained from using it, Semel said. "We really wanted to do the best that we possibly could to stay very friendly with the existing suppliers of content," he said."
One point that Forbes didn't make is that Yahoo is relatively short on cash status, at least compared to Google and Microsoft. Today Yahoo is thought to have less than $3B in the reserves, while Google has around $11B. This situation implies a possible catastrophe for Yahoo in the case of a Viacom-like billion dollar lawsuit - almost 33% of their cash in the bank, so it's very risky! This then was another contributing factor, for Yahoo at least, when it came to choosing to partner with News Corp, NBC, et al. Because when compared to Google, Yahoo has a lot less tolerance for copyright lawsuit risks.
It certainly seems like Viacom's $1 Billion game of chicken against Google has paid off, at least in terms of scaring the other Internet companies to get into line and partner with big media.
Thanks Emre Sokullu for the analysis on Yahoo in this post.
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Well, the first announced mistake they are making is that this will be a only-US product.
Let's start charging our proxies .... :)
Not just Yahoo but Microsoft also is scared of lawsuits; they've just shuttered MSN SoapBox from public access.
The themes that Richard introduces here are very germane to alt search engines.
There is a Great Deal of Innovation by startups [See: The Top 100 Alternative Search Engines, February 2007 in the Read/WriteWeb Archives - fantastic innovation is what got almost all of them on the Top 100 List!
Richard also writes, "Forrester recommends that bigcos, like Microsoft and Google, 'go on a shopping spree for best-of-breed technologies.'" I personally know of one alt search engine that has just approached me for obtaining exposure - solely so that they can be acquired by a bigco!
The health search engine Medstory (www.medstory.com) was just bought by Microsoft, and Google just bought one of my favorite alt search engines which I am not at liberty to name.
Richard further notes that, "Forrester recommends that small players 'partner to create a tightly integrated ecosystem to go head-to-head with the suites.'" Hint! Hint! Hint!
Let me just say it here: The Top 100 Alternative Search Engines better "create a tightly integrated ecosystem" or the best ones will be picked off one by one by the bigcos, leaving only the second-rate ones behind to fade into obscurity...
I don't think any of us should be delusional enough to assume that traditional business is not pushing Web 2.0 as hard as any other entity. NewsCorp is still the same old story as well as the others.
Myspace is essentially a cattle pen designed to throw more Ads at the herd. Now we can watch 24 on Web 2.0 and have World 1.0 brain numbing advertising thrown at us even here. I know you are not surprised by any of this.
Leverage and misinformation, why feed anyone anything else if that is all the little fish want. Sorry, I am not overly cynical but I hoped for something more when I got on this boat.
Phil Butler