It's all over but the pruning.
Google's
It's a lot like fast-food chains' moves to strip trans fats from their menu. The restaurants know it's the right thing to do -- they're just doing it slowly, to make sure they don't lose the flavor patrons crave.
Is the "do no evil" company turning into "see no evil"? Nope -- it's a bit more complicated than that. Google knew it would set off a few copyright-infringement traps when it acquired the world's top video-sharing site. If anything, getting Viacom to threaten YouTube just as the video site is ready to spin a wider web of revenue-sharing has me thinking that Google's the one actually setting the traps.
The power of money
Let's start at the top. The most subscribed-to channel on YouTube is LonelyGirl15. Most of its more than 80,000 subscribers came aboard last year, when the episodic teen drama made its mysterious debut. Even after the seemingly playful video blogs were exposed as scripted, and the series took a dark turn with an occult backstory, the views have kept coming.
However, the LonelyGirl15 creators aren't monogamists. As good as YouTube has been in propelling the franchise, the project masterminds chose to use Revver.com -- a much smaller site that initiated a revenue-sharing policy more than a year ago -- as the source of the embedded videos on their namesake website.
The second most subscribed-to channel on YouTube? That would be the sketch-comedy stylings of Smosh. The two 19-year-old humorists owe their success to YouTube's leveling of the media playing field, but they, too, have moved on to greener pastures. Their latest installments thank LiveVideo.com, another upstart video-sharing site that may be bankrolling its biggest draws.
Third? Why, it's CBS
It doesn't end there, of course. Nobody's Watching and Barats & Bereta -- two of the funniest properties to break out on YouTube last year -- have gone on to ink development deals with NBC. (In fairness, before it got noticed on YouTube, Nobody's Watching was a sitcom pilot that got passed up by NBC and the WB, created by veterans of network hits Scrubs and Family Guy.)
So think about it. If you were Google, wouldn't it be a higher priority to offer revenue-sharing deals to your top stars than chase down the teen who uploaded a South Park clip? Of course.
At present, the biggest draw for potential YouTube uploaders is using the exposure the site grants as a platform to cash in elsewhere. If YouTube wants to be the only video-sharing site worth watching, it needs to give its armchair directors a way to make money off their creations as well. After all, that same strategy has helped make Google's AdWords network of text ads such a success.
It is working? Even as little more than vaporware, the hope of revenue-sharing from YouTube is already starting to bring the flock in closer.
"We are as eager as everyone to see their rev-share model," the LonelyGirl15 creators told The Daily Reel last week. That sounds pretty conciliatory for a creative team that still uploads to YouTube, but has no beef promoting a rival site beyond those virtual walls.
I've got a prediction. Within a month of YouTube rolling out its revenue-sharing plans, hits like LonelyGirl15 and Smosh will be back, almost exclusively, on YouTube.
Video killed the Viacom star?
No one can hold a candle to Google when it comes to online advertising. Yahoo!
I've already speculated about the form YouTube ads will take. Google's seemingly endless supply of contextual text ads will be a richer source to mine than the old-fashioned banner ads presently populating video-streaming sites.
Just imagine that you're watching a clip of a labradoodle rolling around in the yard. At the end, instead of the current links to a pair of related videos, imagine clickable text ads for an organic flea shampoo and an online store that sells heartworm tablets.
Videos have tags. Viewers provide comments. It's Google AdSense 2.0 for moving pictures. Television advertising would kill for a chance to serve up that kind of niche relevancy.
Maybe Viacom has seen this all along. Sure, it has a legitimate beef with YouTube. If its claims are true -- that 1.2 billion streams have been generated from its content without authorization -- it has every right to be hopping mad. But just as importantly, it realizes that its content is feeding a growing monster. It has to nip YouTube in the bud.
Unfortunately, by doing so, it 's stepping right into YouTube's trap. Now Google will accelerate the rollout of the revenue-sharing plan. In addition to creating loyal directors, Google's also likely to cut webmasters in on the fun, giving them a thin slice of the pie to ensure that they, too, spread the viral magic of the YouTube brand. In the end, YouTube will give established networks another revenue stream to paddle. Viacom will be back. How can it not? If it looks hard enough, it may see a bit of itself and its MTV roots.
Remember when MTV actually ran music videos? Back then, the network grew on the backs of hungry music labels making splashy videos to get their artists noticed. Isn't that a little like YouTube today?
The weightier issue is whether Google's monetization strategy on YouTube winds up disrupting all of the multimedia content industries. The fourth most subscribed-to user on YouTube is London-based singer miaarose. Now she's starting to draw interest from record labels. If Google's aim is true, in a few months, she may not need the record companies at all to bankroll her musical career.
Silly Viacom. You've just awakened a media-munching monster.
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Longtime Fool contributor Rick Munarriz isn't a YouTube junkie, but he does find himself on the site more often than he would care to admit. He does not own shares in any of the companies mentioned 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.
