Viacom vs. YouTube – Guess Who Lost?

I’ve started and stopped a good half dozen posts about the Viacom/YouTube breakup. Like most business deals, this one came down to money. The amounts offered by the Google team didn’t meet Viacom’s notions of what their programming is worth. This makes me wonder if Viacom has a clue how the Internet works — to date, I have not seen evidence that anyone is better at leveraging online eyeballs and advertisers than Google.

For all of the press and hype, it is still not known whether or not YouTube is just a flavor-of-the-month. The kind of audience we’re talking about is very fickle. Yet, the evidence shows that right now, the viewers are at YouTube. Water cooler discussions make it clear that the site is the first, second, and third choice for those who don’t TiVo — “I’m sure it’s on YouTube” isn’t just conversation, it’s a belief.

Arguably, programming such as The Daily Show has benefitted from constant YouTube exposure. The kind of buzz that comes from an especially funny “Moment of Zen” requires access to the “Moment”. This means the content needs to be available immediately, users need to be capable of passing links or embedded video easily, and — this is the one that I think is critical — the content needs to be right.

What I mean by this final point is that viewers don’t want the whole show (necessarily) and they don’t want commercials (though there is some tolerance here). They want their clip, they want to laugh, they want to do it in the privacy of their cubicles, and they want to move on to the next thing. The so-called Bored at Work Network requires a constant stream of little nuggets, not full-on programming.

I’m not sure that Viacom is ready for this type of programming. Sure, the studios are racing around, trying to force mobisodes and minisodes and microsodes into the product pipeline, but do they truly understand the audience? Remember, the YouTube crowd wholly embraced LonelyGirl15. The online audience is different than the broadcast audience which is different than the DVR audience which is different than the PBS audience…get my point?

The content that thrives on YouTube is, by nature, ephemeral. The bit that’s buzzing around the Internets today will be replaced by something new tomorrow. Viral content, by and large, doesn’t translate to big advertising dollars. It’s a click-and-go crowd, as anyone who’s ever been Slashdotted or Dugg knows. For better or worse, two days from now, today’s The Daily Show is stale content. There are funny, long tail bits that can be extracted, but the format of the show is time sensitive, so the potential for long-term revenue is limited.

For all of its quirks and kinks, the YouTube interface is remarkably simple. So simple, in fact, that one would be convinced that it was designed with the end user in mind. This sort of focus, I’m sorry to say, is not a trait exhibited by the major media companies. Quite the opposite. They’ve done everything they can to make accessing content an endurance race. It’s like they hate their customers.

They’re definitely creating pirate where law-abiding citizens once lived, but that’s another story.

Finally, Viacom is placing a lot of faith in network branding. They believe their viewers know the channels and the parent company of their programming. Big mistake. This is a mistake. A viewer who is trained to go to YouTube isn’t one who is similarly trained to find the Comedy Central website. It is far easier to go the viewers than to make the viewers come to you.

Viacom is also thrusting itself into a talent showdown. While the studios are still working out the kinks of how to report online video, there’s a sense that these short “clips” are non-reportable, promotion-only bits. This means that participations and residuals may not be applicable. That whole argument is hard to maintain when it becomes clear that big dollars are flowing into the studios. These clips become legitimate, viable, reportable revenue streams.

Nobody thinks the guilds caved on the 20% DVD royalty because they thought the studios had a valid argument. They have been gearing up for the bigger fight, and wildly public disagreements about money can’t help the studios.

In that regard, it would be better for Viacom to keep its hands off the whole mess.

I don’t think that Viacom made the right decision. I could be wrong, of course, but I don’t think so.

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