For TV, Sharing Is Good Business


It may seem counterintuitive for outfits like Viacom to allow content on sites such as YouTube. But the practice creates new viewers for TV

What's the real purpose of a media company? Of course, it's to make hot-shot "content"—TV shows and movies—and get as many folks as possible to see them and pay to see them. That's what keeps the lights on at multibillion dollar media giants like Time Warner (TWX), Walt Disney (DIS), and News Corp. (NWS), not to mention the legions of writers, directors, and actors who make their living helping to create that content.

So, on the surface, a whole army of folks ought to be cheering Viacom's decision on Feb. 2 to demand that YouTube (GOOG), the hottest video site on the planet, take down more than 10,000 clips from the Net unless it's willing to pay Viacom (VIA) for the right to carry them. So, for the 29 million unique viewers who logged onto YouTube as recently as December, that means no more clips of The Daily Show with Jon Stewart from Viacom's Comedy Central channel or MTV's Punk'd.

Sounds like it makes perfect business sense for a media mogul on the make for added revenues, right? Well, maybe. But as a card-carrying member of the TV generation who logs onto YouTube on a regular basis, let me tell you how short-sighted Viacom Chairman Sumner Redstone and his crew really are. For years, TV ratings have been heading south, well before YouTube was launched in early 2005 by three former PayPal executives. Folks were tuning out and watching DVDs, playing computer games, heck, probably even reading a little more.

Saw It on YouTube

Even cable channels, which stole a march on broadcast networks in the mid-90's, have started to lose viewers of late. But a funny thing happened last year: According to Nielsen Media Resarch, household TV viewing jumped to its highest level last year—8 hours and 14 minutes a day, a full hour more than a decade ago. And, according to Larry Gerbrandt, senior vice-president of the company's Nielsen Analytics unit, "Video on PCs and iPods actually is expanding the audience of traditional TV programs."

Media guys, that means that folks who are logging onto the Net, even YouTube, may actually like what they see enough that they head to the tube to catch the next show. It's called promotion, and it isn't costing you a dime, certainly not the millions a year in billboards and other ads you traditionally spend to launch or keep your shows in front of viewers' eyes. Sure, there are all kinds of counter arguments: A recent study by Harris Interactive found that about 32% of frequent YouTube users are watching less TV. Then again, that means that more than two-thirds are watching at least as much TV as they did before.

So far, there isn't much in the way of hard evidence that says, one way or the other, whether folks are logging off the Net and headed for the TV after getting hooked on one of those brief clips. But media companies have tons of anecdotal evidence. NBC (GE) said not long ago that its show The Office owes at least some of its popularity over the last year to its appearance on Apple's (AAPL) iPod service. Same for DVD sales of the Walt Disney's show Lost, I'm told.


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