Joost In: Some Real YouTube Competition?

Perhaps Viacom had an ace up its sleeve after all.  When the company stormed out of negotiations with Google a few weeks ago and demanded that YouTube remove all its clips, the popular thesis was that the "Big Media YouTube Rival" was a go.  It wasn't--and, likely, will never be--but Viacom appears to have found a reasonable Plan B:

Just two weeks after ordering its content to be pulled from YouTube, Viacom Inc. today is expected to announce a broad licensing deal with Joost, a new Internet service that specializes in commercial video content. The anticipated deal, which follows the recent collapse of similar talks between Viacom and YouTube parent Google Inc., involves licensing hundreds of hours of programming from Viacom cable networks such as MTV, Comedy Central and Spike as well as movies made by the company's Paramount studios.The companies declined to disclose financial details. In similar deals in the past, Viacom has received two-thirds of the advertising revenue and other compensation.  (WSJ)

YouTube has already won the online video-clip game.  It may be, however, that the online video-show game--the place where users can go to find full-length TV shows and other Big Media content--may eventually have a different winner. 

According to the WSJ, Joost's strategy is not to run clips but full episodes with high-quality resolution--"real TV online."  It is not hard to understand why this, combined with a guaranteed revenue share and a commitment to partners, is appealing to those in the TV business.

What is hard to understand, at least at this point, is why anyone would want to watch "real TV online"--at least when there is a functioning television set nearby.  YouTube viewers watch 100 million clips a day in part because the clips are a different entertainment product than a television show, one that is well suited to both the smaller screen and short attention span of the average Internet user (for whom a 30-second television ad seems as long as Dr. Zhivago)  Using the internet to distribute TV shows to televisions is one thing, but using it to actually watch those shows on computers is another.

Unless Viacom and other TV companies figure out how to break their shows into clips, and then license those clips exclusively to Joost, deals like today's are probably not much of a threat to YouTube.  If Viacom does figure out the clip thing, however, and Joost signs up a bunch of other media companies... Well, then, YouTube might want to hurry up and get its Big Media act together.

Comments

[Bjorn]

Joost is nothing like YouTube:
http://joost.com/FAQ.html#include_faq_public-I_27vedownloadeditandrunitwhatdoIdonow_3F

You have to download software to use it. It competes more with iTunes, than with YouTube. There already is Viacom content on iTunes, this is just further defragmenting of tv show publishing/dissemination.

[Henry Blodget]

Thanks. Will Joost charge for the Viacom downloads, like iTunes? If not, it seems like just another approach to free ad-supported content (like YouTube), rather than an iTunes competitor. The impression I got from the WSJ article was that Viacom would just get a big share of the advertising.

[echotoall]

ur title needs some editing. your valid points get lost in the title.

if u click on my url you will see what i think of the deal. it is a freaken joke, and if i were a via investor i would be pissed.

management is igoring the obvious... still. youtube took their audience, and now they are dealing w/an entity that has NO audience. VIA needs to bring their content to the audience. what they just did w/joost already exists via Comdeycentral.com... an no one visits comdeycentral.com to watch the content.

the internet is like a hangout. the popular place is where you have to be, and that is where people will go.

(i saw your article on seekingalpha, but for whatever reason i could not comment there, even after i logged on.)

[john]

I just watch a full episode of "Lost" that I forgot to record. I would just go to the ABC webpage for it.
It takes a dedicated fan to watch TV episodes on computer or ipod etc.

[Elita]

why someone would watch "real TV online":

- free TV on demand
(I missed an episode of 24 and don't have TiVo. I watched the entire episode online even though the resolution is no where close to the HD quality I'm used to. this probably won't happen if comcast has every show OnDemand.

and some shows you don't really need high quality HD resolution. Just want to be entertained w/ the jokes/segments on Daily Show and Colbert Report.)

- old shows, international shows that's not on regular cable(check out PeekVid.com)
- kids/college kids might not even have their own TV.
- laptops are portable, TV not
- slackers at work in front of PC

[echotoall]

john,

GOOG's CEO sits on AAPL's board. When video google first appear anyone w/an iPod was able to upload the videos to the ipod. (see where the trend is heading)

imo, in due time, AppleTV will have the ability to play Youtube material. This is why traditional content providers need foresight, and have to give up a little more to ultimately get more.

if apple plays their cards right w/appleTV, it has the potential to be huge.

[Robert Atkinson]

For monetization discussions, it may help to identify the business models by which money flows through the system. Here are the four routes, from a distributor’s perspective:

1) Payment flows received by distributors from end-users:
- Subscription-based payments from end users (CATV)
- Single-purchase-per-video payments from end users (iPod, pay-per-view, VOD)

2) Payment flows received by distributors from advertisers:
- Broadcast ad model: embedded ads / upfront ads (CNN web news clips)
- Web ad model: ads placed next to the video on the screen

3) Payment flows received by distributors from content providers:
- CATV carriage model (old-school; not seen much any more)

4) Payment flows received by distributors from other distributors:
- Web carriage model (CATV channel X may pay IP distributor Y for a premium placement on Y’s vehicle, e.g., see STREAMsurfer at http://www.internettvreceiver.com/surfnow.asp)

In models 1, 2, and 4, content providers are in turn paid by distributors using one of several carriage payment models, typically directly linked to # eyeballs/clicks.

Note that the potential route #5 of “payment flows received by content providers directly from end users” model (e.g., consider Comedy Central selling video directly from its web site) is a red herring, in that the content provider still must act as distributor (on its own), so in reality this route is merely a subtype of #1 above.

Can anyone think of others? If not, all emerging Web content distributions models must fit one or more of these routes.

This analysis, of course, sets aside the best route to monetization: sell to GOOG.

-Robert
www.kupperlin-law.com

[Robert Atkinson]

Also, here's a proposition for people to react to:

Long term, the golden key (bulk of monetization) for video content is (1) user-selected (2) IP distributed (3) to television sets.

Agree or disagree?

[john]

while watching the last episode of "Lost", a special bottle of whiskey was discussed. I would like to see ads changes on the side as different products are discussed or show up. At the end of the video, all those ads would show up again together. I would have definitely click the whiskey ad if there was one.

[mr.b.wilson]

Along the whiskey ad idea above, there has been talk that Google could also use past surfing history or search terms that an individual makes and then takes that info and pushes ads around content. So if I search for minivans, maybe I get an add for a Dodge Caravan.

[john]

Does Youtube really even need Viacom?

Its not just youtube whose traffic is surging. Many of the video content websites have experienced an upswing. It's interesting to read that Youtube's early february traffic was greater than the combined traffic of all the network websites.

Youtube clones like http://www.dailymotion.com are also benefiting from the increased attention paid to these type sites. Interestingly there are even youtube-type free porn videos sites like http://www.freepornvideos69.com (NSFW) that have popped up to take advantage of this phenomenon.

We can probably expect the big network websites to offer even more vidoes to try to compete in the future.

[Alessandria]

Hello, better than joost, it's TVonline :

To watch TV and listen radio for free :

http://www.tvonline.2ya.com

Lot of webradio & webTV like MCM, MTV, Eurosport, ESPN, CNN, ABC, Skynews, Discovery channel, Sci-fi channel, FOX movies, NASA TV, Research channel, and more.

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