February 03, 2007

Viacom Versus YouTube

Relatively Old Media versus New Media: Viacom versus YouTube



Well one of the most interesting New Media stories to break at the beginning of February is the spat developing between Viacom who control MTV and Google's recently bought YouTube. Its fornt page stuff  for the Weekend Financial Times (non-virtual) and it also appears in their important Lex column and it's an important story for the BBC online business / technology columns. 

Viacom too greedy for its own good? 

Its interesting because it raises the question of whether Viacom in the longer term is shooting itself in the foot.  Viacom has demanded that YouTube remove approximately 100,000 videos which contain some of its copyrighted material from MTV videos and other easy to use clips. this is likely to intensely irritate an exponentially increasing youth community who have already rocked the mainstream music industry to the core. The youth market is primarily who music videos aim at and those are the same people who are increasingly turning to user generated content, perhaps in a post-modern style of hybridised mish-mash of images which partially use 'found objects' such as bits of music video. 

The fact of the matter is that the dramtically falling prices of technology and the rapidly growing base of people who can use these technologies represents the youth 'barbarians' battering at the gates of civilisation as Viacom shareholders know it.

The attitude which Viacom are taking is merely likely to help create a sort of repetition of Punk where the behmoths and dinosaurs of mid-seventies rock spending onanistic months producing some 'concept' album or another. The young don't mind it raw and 'in yer face' the key thing about the content is that it needs to be up to date and dynamic. The era of 'high added value' otherwise known as ripping off the consumer is rqapidly coming to an end in the pop/rock video era.  

Warners see the light 

Well if I was a pension fund manager or similar I would be reconsidering any long-term holdings in Viacom. Previously they were gatekeepers just as EMI was, now look at the latter.  Whilst the Lex column a little pompously notes that:

Among the ragbag of user-generated content uploaded to YouTube, many of the more popular video clips are from mainstream content providers. Those media groups understandably want to be paid. (Lex 03 / 02 / 07)

Lex then notes  that Warner Music, for example quickly came to a deal by arranging revenue sharing with YouTube for advertising that appeared alongside its content. Lex notes that Viacom's MTV and comedy Central both have content which is easily cut and pasteable by choosing highlights. Viacom didn't get offered the deal it wanted and has 'turned up the heat'. 

Lex notes that Viacom probably doesn't want a head to head with Google which is now exceedingly wealthy and any lawsuit is inherently unstable. Lex might have added that Google appear to be more in tune with the spirit of youth which is pervading the social networking sites. The reality is that market fragmentation means that there will be more people producing content and getting paid less. For the forseeable future it probably means that trends will come and go more quickly.

The BBC story on this quotes Google as saying:

But it added that it was "unfortunate" that Viacom would no longer be able to "benefit from YouTube's passionate audience which had helped promote many of Viacom's shows".

This is rather in accord with my point and could be interpreted as a velvet glove covering the digital fist.Viacom would be better off taking a sensible deal rather than risk having its acts being sidelined. 


These are the sort of fascinating case studies which my AS media students have to look at. (For anybody who doubts for a moment the importance of web 2.0 and social networking look at this years Davos lineup). Usually there is a question along the lines of 'Do media companies always welcome New Technologies'. Well the answer is that buying up the owners of the technology if it looks as if there is a potential market  is a good idea otherwise you risk being sidelined. Google has entered the fray of the media world making the transition from being primarily a very effective search engine into a global player. Viacom appears to be doing a Waltz whilst Google is break-dancing. In the long term they may be heading for a fall. If I had the money I'd be buying Google shares not Viacom ones!

Postscript: for more on the Google buy up of YouTube

Postscript 2:  Interview with Chad Hurley who was a founder of YouTube at the Davos World Economic Forum. Viacom shareholders please take special note :-). Here is another interview with Chad Hurley in relation to  copyrighting concerns.

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