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NewTube Is Just The Beginning


Give it up for NBC Universal and News Corp. (NWS), because in late March the two old-media titans made the biggest splash for a nonexistent product since the iPhone.

Of course, Steve Jobs has a couple of prototype phones that a lucky few can dandle. News Corp. and NBC Universal have nothing to show for their ambitious Web video destination site and service (not even a name, so I'll call it NewTube), aside from syndication agreements with Yahoo! (YHOO), Microsoft's (MSFT) MSN.com, and Time Warner's (TWX) America Online, along with a fairly detailed business brief. Among other things, NewTube's (GOOG) videos can be embedded on any site, YouTube-style. But unlike YouTube thus far, they'll come with Big Media-approved copyright protection and, at least in some cases, a small share of ad revenues.

For media geeks, NewTube (its executives, unsurprisingly, prefer the clunkier handles NewCo or NewSite) is big news. But the venture, expected to launch this summer, is merely one of myriad developments that will remake the world of Web video in the next few months. Google (GOOG) is expected to begin rolling out advertising systems for YouTube this summer. This spring, News Corp.'s MySpace will formally push into YouTube's video-sharing turf, launching an offering that insiders currently call MySpace TV. And top executives at Time Warner suddenly sound confident that a mutual technical solution to copyright issues with YouTube—the subject of a lawsuit Viacom (VIA) filed in mid-March—is close enough to make likely a content-licensing deal. (Spokespersons for YouTube and other companies declined to discuss potential deals or negotiations.) Mingling within these overlapping layers of competition and cooperation is the suddenly less remote prospect of making some actual money.

A COMPLEX CROSS-COMPANY PLAY like NewTube comes with a dense thicket of issues to hack through. Networks don't own many of their TV shows, for instance, which will make divvying up those revenues an interesting negotiating experience. Another is that NewTube's sales force will primarily start out selling pre-roll ads, which run before video clips. This is a format the freer-form video-sharing sites have wisely shunned because it makes for a lousy experience.

While NewTube will feature short clips from established shows, at launch it probably won't allow users to chop up and share favored bits of, for instance, The Office—which is exactly what helped YouTube explode. (Although it will allow users to create mash-ups.) On a conference call held in the wake of the announcement, NBC Universal CEO Jeff Zucker and News Corp. President Peter Chernin said NewTube will leave consumer-produced video to the YouTubes of the world—so semipro video effluvia, like grainy live band footage, will be more or less absent from NewTube. (Possible exception: NewTube users' parodies of programming already featured on the site.) And there are the enormous tasks of making the technology work and keeping all the egos in check. But that NewTube's videos will be distributed widely throughout the Web, rather than being locked up on one central site, indicates that the current climate has already shrunk some heads and forced TV executives to embrace less controlled means of distribution.

At press time, Google and YouTube hadn't signed on as distribution partners with NewTube, although some seem confident they will. There is a carrot here: shares in ad revenue from big advertisers, since the likes of General Motors (GM) and Intel (INTC) have already signed on. YouTube might want to feature NewTube clips, since they would net it additional monies. In a perfect world, NewTube offers YouTube a carrot to play along with copyright holders on the sorts of issues that outraged the Viacoms of the world. Perhaps a YouTube competitor could end up bringing the ur-video-sharing site into the light. Could, that is. This is media in the 21st century. Any predictions must be framed with a fistful of "ifs."

For Jon Fine's blog on media and advertising, go to www.businessweek.com/innovate/FineOnMedia

By Jon Fine


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