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Viacom Could Embrace YouTube and Create New Ad Revenue

Viacom is treating YouTube like a copyright infringer, but there’s an easy win-win scenario: advertising barter and a per-subscriber fee. All Viacom needs to do is to think of YouTube as just another ad-supported distribution platform.

Viacom is treating YouTube like a copyright infringer, but there’s an easy win-win scenario: advertising barter and a per-subscriber fee. All Viacom needs to do is to think of YouTube as just another ad-supported distribution platform.

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Consumers have been sharing Jon Stewart and Steven Colbert clips on YouTube, and Viacom is fed up. Last Friday, the corporate parent of Comedy Central demanded that YouTube remove over 100,000 clips of Viacom’s copyrighted programming. YouTube is enabling viewers to watch bits and pieces of the Daily Show without paying for Viacom’s precious content… the horror!

Actually, nobody pays Viacom specifically to watch the Daily Show. Yes, a tiny portion of your monthly cable bill is passed on to Viacom as a per-subscriber fee for Comedy Central, but most of Viacom’s revenue comes from advertising. Since the Daily Show is already an ad-supported business, why not treat YouTube as a secondary advertising platform rather than a scary Internet revolution?

Unlike the music industry’s confrontation with Napster, the Viacom/YouTube dispute can be solved with off-the-shelf ideas. Television networks are no strangers to revenue sharing; they incentivize their broadcast affiliates by giving up a few minutes of local TV advertising during each show. The industry calls this “barter,” as in, you air my show in Cleveland, and I’ll give you three minutes of ad time that you can sell locally.

Satirizing the latest news, the Daily Show has a particularly short shelf life, unlike dramas and comedies that can be further monetized on DVD. Daily Show clips are hot for a very brief time, and Viacom should maximize ad revenue during this brief window.

If Viacom treated YouTube as another cable company, then a per-subscriber fee and an ad barter arrangement could be quickly worked out. The definition of a “subscriber” would require some negotiation, but the general outlines of a deal would already be in place.

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YouTube is now owned by Google, whose high-flying stock makes it the ultimate deep pocket. Viacom may be dreaming of a huge up-front payment from Google, but that may not be in the cards. Why should Google write a nine-figure check to Viacom, just because YouTube’s screen is a little different than Comcast’s?

If Viacom can see YouTube as a natural extension of broadcast television, all of those Internet eyeballs can be monetized. If Viacom sees YouTube as a monster that must be stopped, Daily Show fans will share their clips underground, dispersing YouTube’s huge audience and potentially killing off a valuable new revenue stream.

Greg Spotts is Creative Director of the Shortlist Music Prize, and rocks the digital media beat for Fast Company.