YouTube - Big Media Video: Revenue Splits and the Real Stumbling Block

In Sunday's New York Times, Richard Siklos provided some detail on the contemplated revenue splits for BIGMEDIAVIDEO.COM (the NBC/News Corp. theoretical consortium) and YouTube and its content partners.  He also suggested (as the Times has previously) that the real stumbling block in the Big Media-YouTube negotiations is not money but control: The Big Media folks can't live with the idea that someone else (GooTube) will sell advertising against their content.

According to Siklos, the revenue splits between BIGMEDIAVIDEO.COM and its distribution partners will be 90%-to-BIGMEDIAVIDEO and 10% to the distribution partner.  This is interesting, but it leaves out the most important split, at least w/r/t the YouTube-Big Media negotiations: The split between BIGMEDIAVIDEO and the specific Content Owner.  Will each partner in the consortium contribute the same amount of video?  Will they own the same amount of equity?  Will the revenue splits be the same for all BIGMEDIAVIDEO content providers?  If not, the consortium is especially doomed to failure.  If FOX's videos are more popular than NBC's, why will Fox sit by and allow its competitor to benefit at its expense?  (Sorry, but this BIGMEDIAVIDEO thing is DOA).

Siklos also reports that the split between YouTube and its content owners is 30%-to-YouTube and 70%-to-the-content-owner.  This seems reasonable, especially if YouTube is shouldering the costs of selling and serving the advertising (or perhaps the split is after overhead).  If this split were the only hang-up, every major media would probably rush to do a deal with YouTube. 

According to Siklos, however, the larger issue is control: Big Media folks revere their relationships with advertisers, and they don't want someone (Google) getting between them.  In my opinion, if Big Media wants to survive in this new world, this is something they're going to have to get over.

Comments

[Still Inside]

I don't really understand the value of a consortium here either. All of these companies have huge brand names and tons of horsepower to drive traffic to their own domains. If you want to watch the latest episode of 24 online, wouldn't you just go to fox.com?

The technology hurdles aren't a big deal. Charging some money to show somebody a video is no longer rocket science. It's even easier if you don't charge and just run ads.

Talking to YouTube in the first place was probably a knee-jerk reaction to the popularity of the site, and GOOG's eye-popping purchase. The consortium thing sounds like a knee-jerk reaction to the knee-jerk-driven deal falling through.

If any of these guys take a deep breath and run the numbers, I bet they're going to come right back to their own home page.

SI

[chrisco]

I'll take the other side of the trade... I mean with expectations at "this BIGMEDIAVIDEO thing is DOA" then an upside surprise should not be a problem. Cheers, chrisco / BigMediaVideo.com

[DanSing in the Dark]

Which job site has the most listings and the most traffic? CareerBuilder. Who owns it? A consortium of Gannett, Tribune, and McClatchy. Who were the first movers? Monster and HotJobs.

...So why wouldn't NBCFoxTube be analogous?

Of course they will maintain their own domains too, but here are some arguments in favor of the consortium site:
--Cross-promote content across networks
--Single infrastructure, so possibly some scale advantages on the cost side
--Helps drive standards for ad formats, measurement, interactive features, targeting, etc.
--A bit easier for the interactive agencies to buy
--More traffic helps ensure the site pops on interactive buyers "top 30" reports (for RFPs)
--Critical mass of audience to make ratings, recos, and discussions useful.

O ye of little faith.

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