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October 9, 2006

Google and YouTube: What is going on?

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Things are starting to get both very interesting and very, very confusing.

Google and YouTube reportedly took a break from their own (very much alleged) negotiations to pen parallel licensing agreements. YouTube has signed deals with Sony BMG, Universal Music and CBS; while Google has penned deals with Sony and Warner (YouTube’s already got this one in the bag).

For those keeping score, that’s YouTube, 4; Google, 2

Here’s your breakdown:

YouTube

  • Universal Music: Doug Morris officially got a clue. Instead of threatening to drag YouTube into court for costing him and the artists of Universal Music tens of millions of dollars, he has instead decided to pair up. The deal looks to be pretty similar to the deal YouTube struck with Warner Music, where Universal will allow YouTube to access approved copyright-protected content, as well as incorporate it into their own homemade videos.
  • SonyBMG: As it becoming standard, this agreement will allow YouTube users to “interact” with videos by Sony artists, (I love their use of the word interact, like they’re going to have a tea time or something) and comes with its own friendly user-generated content clause.
  • CBS: In a most interesting pairing, YouTube has penned a deal to create a CBS branded channel on YouTube (cause it worked so well for Paris) that will feature short clips from popular CBS programming, CBS news snippets, previews of its new fall lineup and more. There’s also a user-generated content aspect where “fans” can upload their own content from “tailgate parties, pep rallies and other campus events”. Heh, that sounds utterly ridiculous to me.

    I’m all for television networks pairing up with YouTube if its going to give users something of value, but this doesn’t seem like real value to me. This seems more like advertising material instead of actual content. Almost like CBS knows pairing with YouTue is a smart idea, but they don’t know why it’s smart.

Google

  • Warner Music: If you remember the terms of the YouTube/ Warner Music deal, there are no surprises here. Google Video will get access to Warner Music’s music video collection and other artist-related content. Users can purchase the videos for $1.99 and AdSense publishers will be able to run and earn money through related ad-supported videos. And of course, the added user-generated content clause means users use Warner’s music library for use in their own productions without getting sued.
  • Sony BMG: As with the Warner deal, Google gets ad-supported Sony music videos, AdSense publishers are able to create and profit off of ad-supported Sony videos, and viewers will be able to access “user-created video content” featuring an array of Sony BMG artists.

What’s (where’s?) the deal?

So those are all today’s announced deals, but what’s really going on? Why are Google and YouTube signing, what looks to be, synchronous content licensing agreements. Are they the ones out scouting or are the record companies all of sudden anxious to capitalize? It looks like a combination of both.

There’s a lot of speculation that Google and YouTube will announce some sort of licensing agreement later today, however, there doesn’t seem to be any actual proof behind it. Right now there’s just a whole lot of talk and unnamed sources.

A Google/ YouTube pairing would surprise me. Why would two large brands want to risk their identify and become associated with the other? The losses seem larger than any potential gains.

But the aligning licensing agreements look suspicious. Are both companies getting their ducks in a row or are they simply covering their own bases and doing what’s best for them individually? Personally, I think the latter. Who knows how long these deals have been in the works. YouTube and Universal have likely been talking for some time, given Doug Morris’ rage a few weeks back. Maybe today’s slew of announcements is just the workd of some really odd timing.

If a Google/YouTube merger was coming, why would both companies need to be aligned so tightly? They wouldn’t.
Whether a Google/ YouTube alliance is on its way or not, these partnerships go a long way to legitimize YouTube. Clearly, anyone looking to buy YouTube is not a moron, as Mark Cuban continues to profess. Users have rallied behind it, the record companies are learning to monetize their properties, advertising opportunities are being formed, and even a powerhouse like Google is taking a nod and allowing users to create and upload their own content. There’s a formula here that is working and not the least bit moronic.

I want to see this give Google Video a second life. With tons of new content now available, new advertising avenues and the chance to build a Google Video community, there’s no reason why it can’t succeed. If any company can create the type of community feel that YouTube has, it is Google. Google users love Google and they love other Google users. It’s both endearing and annoying.

Up until this point, Google Video has suffered a rather lackluster performance for two main reasons. First, most of its core audience has already been swept up by YouTube. Second, Google Video isn’t where you go for user-created videos. It’s where you go to see that television show that aired last night, weird music videos, out-of-copyright cartoons or uploads of commercials other users found funny. It’s always been a different kind of site than YouTube, a less successful one.

However, that can change, if Google wants it to. Google Video now has advertiser backing, and if Google knows how to do anything its to leverage its advertisers. With deals with Sony and Warner, advertisers funneling money through the service and users being encouraged to use the music library to create their own videos, it could give Google another chance at monetizing this property. And if that happens, YouTube gets its first real competitor. It may come down to which site has deals with the best record labels. And wouldn’t that be fun.

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