You've heard it a thousand times: Content wants to be free on the internet. Of course, there's just one little problem with that -- it costs a lot of money to make a lot of that content.
So, as traditional media companies feel their business model being eroded by the un-monetized (at least not for them) distribution of their content, a problem is born, not only for the media companies themselves but also for the distributors, who open themselves to accusations of copyright infringement.
The tension between the costs of content production and free, tough-to-police new-media distribution were brought to a head last week by Viacom's $1 billion copyright lawsuit against Google and YouTube.
Taking back control
The suit was billed in the Los Angeles Times as a battle between Northern California's tech country and Southern California's entertainment industry; ridiculed on technology podcasts as a foolish move; and defended by media executives. Depending on your point of view, it's a case of traditional media companies either attempting to take back some of the control of their content that tools like YouTube have given to users -- or kicking the gift horse of free promotion to millions squarely in the kisser.
Consider Viacom's suggestions in the lawsuit: "YouTube's brazen disregard of the intellectual-property laws fundamentally threatens not just plaintiffs but the economic underpinnings of one of the most important sectors of the United States economy."
Viacom alleges that YouTube is no longer just a forum for sharing user-generated videos; it's a facilitator of infringement, and its sharing and embedding features make it harder for media companies to even find unauthorized use.
Google maintains that YouTube is more than willing to work with content creators. "YouTube provides tremendous benefit by giving creators a place to post and discuss their videos," a Google spokesman said via e-mail. "We work with thousands of content owners large and small from family-reunion videos to the BBC, NBA and, as of [March 15], the CBS Sports NCAA Tournament Channel. We will continue to respect the rights of content owners and seek mutually beneficial partnerships offering the broadest distribution and the most attractive economics in the market."
A goose at risk
But the struggle between original content and new-media distribution goes beyond video. The Guardian in the U.K. recently published a doomsday editorial by Sasha Abramsky, of the think tank Demos, on the idea that if too many people ditch newspaper subscriptions and rely solely on online aggregators of news content, the financial underpinnings of news-gathering services come into question. "If the L.A. Times doesn't generate news from places like Iraq, how will Yahoo, which doesn't operate its own bureaus, maintain a reliable stream of professional-quality reporting? In a very real way, the internet risks killing off the goose that keeps laying its golden eggs," Mr. Abramsky wrote.
As laid out in Bob Garfield's "Chaos Scenario," the problem for many media companies is maintaining their key revenue streams until (hope, hope) online ad models are robust enough to replace the ones traditional media have grown up on.
Consider that a traditional TV network can run up to 16 30-second spots per half-hour show, at CPMs in the low $20 range. Online, a network is lucky to run two ads per half-hour show -- maybe four or five if it breaks that half-hour show up into bite-size chunks. Even if CPMs run up to $35, that still doesn't make up the difference between linear and online distribution. What's more, Viacom, as a cable company, snares two revenue streams on TV: advertising and carriage fees.
But it's hard to feel bad for Viacom and other traditional media companies who've grown fat on a waste-filled ad model as the world changes to a more efficient, targeted one.
"I don't disagree with what they're doing," said Drew Massey, CEO of ManiaTV, which has gone the made-for-internet-content route to fill its network. "They need to radically invest online, but I think they're afraid of upsetting the cable MSOs and not thinking outside the box."
"Professional sources know there's money to be made [on YouTube]," said David Hallerman, senior analyst at eMarketer. "I do think what we're seeing at this point is more of them trying to do it on their own." The problem, he added, is that YouTube continues to be the dominant video brand online. And because most people regularly visit only a handful of sites, a come-to-me approach on the web isn't typically practical.
'The new marketing'
Jeff Jarvis, author of Buzzmachine.com, has been loudly critical of Viacom's anti-YouTube actions because, he said, "Viacom is trying to position this as stealing, but the truth is it is [Viacom's] fans recommending its content. Recommendation is the new marketing."
Aaron Cohen, CEO of Bolt Media, which recently went through a similar legal struggle with Universal Music Group, said there should be no reason why a robust "Daily Show" community doesn't exist on Viacom's site. "Will Viacom acquire a social framework for video assets or is YouTube going to acquire a library of content? That's the question," he said.
The question all comes down to motivation -- why do users want to upload and watch Viacom content on YouTube? Few believe it's a desire to commit piracy.
"If you provide viable ways for people to get your content online, it will happen," said Shahid Khan, whose company, IBB Consulting, helps lead media companies into the digital world-both online and mobile. "You have to have reasonable means for people to consume that content." And, as it turns out, share it.