Networks to Build YouTube Rival
In the stupid moves of the week column, comes a story from cnet that indicates that the major networks are planning to launch a YouTube competitor.
Why is this stupid? Well it is really quite simple. Let's start with the childishly simplistic business view of the networks. I'm sure they approached YouTube / Google with a proposition something to the effect of 'Hi YouTube / Google, we heard you just got sold for over a billion dollars. How about you pay us for our content, and we will upload it to your site?' I'm sure that Google / YouTube responded by saying, 'Why on Earth would we pay you for your content. You should pay us, we are footing all of the hosting and bandwidth bills.' At this point the networks probably stormed off in a huff.
How should the negotiations gone? Well, if the network executives had any sense. They would have approached it like this. 'Hi Google / YouTube, we would like for you to carry our content. We'd like to have a branded area of YouTube, such as www.youtube.com/nbc, and have our shows there. We'll embed commercials into the stream. In return for this we will share a small portion of our ad revenues with you.' At this point the Google / YouTube execs would think for a minute. They would like this because they would have just figured out a way to monetize YouTube, and at the same time extend its reach to new users who wouldn't normally have gone to YouTube. For the networks, it would allow them to gain an audience that has been difficult for them to reach with traditional television, thereby allowing them to command higher prices for ads. Google / YouTube would have then responded in this manner, 'What about the potential for copying?' The tech saavy network execs would have then responded with 'Well, it is pretty hard to copy flash video, and even if someone did. It would only extend the reach of our advertisers.
If that were the way things had gone down, everyone would have walked away from the table with something. The networks wouldn't have to hire a ton of video editors, web developers, etc… and YouTube would finally have a viable ad model. It is a shame that legacy media finds it so hard to embrace a different type of business and profitibility model for a new and different type of audience. What are they teaching at those Ivy League business schools anyway?