Hating on YouTube

It seems as if even YouTube's media friends are turning on it these days. The battle between Google's (Nasdaq: GOOG  ) video-sharing giant and some major television networks is a front-page story in today's Wall Street Journal.

The article points out that revenue-sharing negotiations with CBS (NYSE: CBS  ) have cooled off. It also noted that General Electric's (NYSE: GE  ) NBC fired off a six-page missive to Google last week, demanding that it do a better job of keeping unauthorized content off its site.

In either case, it's a far cry from the cozy relationship that YouTube seemed to be nurturing with CBS and NBC last year. Both networks have turned to YouTube as a way to promote new shows in the past; CBS is actually the third most popular channel on YouTube in terms of subscribed users.

CBS and Google were brokering a deal that would give CBS a piece of the ad revenue action, whether the clip was uploaded by CBS or an unauthorized third party. CBS sibling Viacom (NYSE: VIA  ) has been a vocal dissenter to the YouTube assimilation plan. It has made headlines this month by demanding that YouTube pull down more than 100,000 videos that infringe on its cable property copyrights, and yesterday it snubbed YouTube by signing a distribution deal with upstart YouTube rival Joost.

Networks may be leaving money on the table by sidestepping YouTube. The CBS deal would have supposedly guaranteed at least $500 million in ad revenue for the network. Obviously CBS isn't stupid. It wouldn't be walking away from the negotiating table unless it felt a better deal could be struck elsewhere (and that is unlikely) or that more could be won in a lawsuit (also unlikely). So why the cold shoulder? Well, walking away makes YouTube that much weaker in terms of content, and that's a tactical move. CBS would hate to contribute to the growing ranks of viewers that are replacing their television viewing time with streaming clips off of YouTube.

That is the rub. Major media networks feel that they should be the ones to control the gateways to content. Unfortunately for CBS, few Internet users even know about CBS' Innertube initiative. They flock to YouTube.

So even if CBS isn't rushing into a long-term commitment with YouTube, it has no problem using the site for now. It has uploaded more than 1,000 clips over the past five months, including a half-dozen over the past few hours. After all, there are still shows and networks worth promoting (and NBC also keeps uploading clips).

They still love you, YouTube. It's just that now they love you from a safe, respectfully fearful distance.

Longtime Fool contributor Rick Munarriz doesn't necessarily set his watch to YouTube, but he does respect its place in the grand scope of things. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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