Viacom is not stupid or backward thinking. They understand the media business very well. They understand that if they take a couple hundred million dollars from YouTube today that they have sold their future business revenue streams.

Sorry, but Mark Cuban is right on this...and so is Viacom. Your new market theories and strategies are just that...theories.

Hey, I was a VP at Napster and fought the RIAA. I know all the arguments about how "sampling" actually improves sales and exposes content to new users who will become paying customers. I believe that is true...but it doesn't matter.

The record labels and film studios own the content and copyrights. They get to decide how their content will be distributed and exposed. They decide. Not you, not me, not Google...the copyright owner decides.

The problem is one of value. Record labels value a song at about $1.00 and film studios value a movie at about $10.00.

Advertising business models can't support that kind of cost/value. YouTube's advertising model can only support a few pennies per stream. Viacom thinks a YouTube video stream is the equivalent of a lost DVD sale, or $10.00.

Google/YouTube can't close the value gap with advertising revenues or new marketing theories.

Believe me I know the theories and have fought the fight. It doesn't work in paractice or theory.

Don Dodge
 

Really? The problem is that, in reality, YouTube is about microchunks - not hour-long programs. If it was just another "distribution channel", the industry wouldn't have a problem - make a new window, slice up the pie, bob's yer uncle.

The problem is that it's something new, which is radically, fundamentally altering the dominant TV business model, reshaping it (and it's about time, isn't it?).

Can "Viacom suing YouTube" vs. "Viacom signing a deal with Joost" be seen as a fine illustration of the above? YouTube is disruptive, and is sued, while Joost (so far) goes for a rather old-school TV approach with some on demand features (= "another distribution channel") and hence gets the deals and the positive attention.
 

I agree that Internet users like "Micro Chunks" of music, TV, and film. They want the best, funniest, craziest, chunks for free and discard the rest.

Record labels have pushed junk on us for years. One or two good songs on a CD of 15 songs...and you pay $20.00 for it. So, you end up paying $10 to $20 for the one or two songs you care about.

TV and film is the same way. Lots of junk punctuated by a few moments of brilliance. If users Micro Chunk the good stuff, they will not care much about the rest and the whole monetization system goes down.

The record labels fought the change. They demanded DRM and demanded nearly all the revenue from download sales. TV and film studios are doing the same thing.

They don't want their content Micro Chunked. They don't want their revenue models disrupted. They don't care about new theories or strategies. They want to hold onto their business models as long as possible.

You and I can call it stupid but that is the model that has made them successful. It is their content and they get to decide how and when to change it. I still have the scars from trying to change the record labels before they wanted to change.
 

Wow, this Don Dodge fella really IS scarred from his Napster experience!

I find this argument to be particularly hilarious:

"The record labels and film studios own the content and copyrights. They get to decide how their content will be distributed and exposed. They decide. Not you, not me, not Google...the copyright owner decides."

Wrong. NO ONE controls supply on a decentralized network. It's literally out of control.

Regardless of the law, etc, anyone on the Net can distribute any kind of media anywhere wherever they want.

All content creators [myself included, I am a musician and run a jazz label/management company] need to deal with the fact that there is no practical way to control where and when anyone is exposed to your art.

Don's "value gap" argument is also pretty humorous. NO ONE will close the value gap because the paid-acquisition business is deflating completely (economic argument: supply is out of control/infinite, so prices go to zero).

Josh at First Round capital has a great post about this...he wants to invest in companies that "shrink markets":
http://redeye.firstround.com/2006/04/shrink_a_market.html

I would suggest that Don step back from all these tactical roadblocks he sees and really take a LONG TERM VALUE CREATION view like Umair does.

By doing that, he might see, um, how to create long term value!
 

Google's on the bus, so to speak, so their strategy isn't microchunks or anything. Their strategy is to grab whatever's working and to keep grabbing. Things have not finished changing-- they've started sliding. This is a Singularity.

There's a small window of time when sharing lots of videos for free on the internet costs a substantial amount of money. That window is already open, which means it's already in the process of closing. BitTorrent is nipping at its heels-- but even if there were no immediate threats, there is a time limit to the whole game. Bandwidth costs (and-- though it's so low already it's almost silly to mention it-- the cost of storing video files) will continue to plummet as a result of underlying technological change, at best sometimes plateauing for a while before the next decline.

A few short years after sharing video on the internet is expensive, it becomes so cheap that it is effectively free. There is of course a cost to sharing text over the internet, but we never think about that cost because it is so low. There is no way to stop the free dissemination of a text file on today's internets. That is the long term status of this problem.
 

Don Dodge said: The record labels and film studios own the content and copyrights. They get to decide how their content will be distributed and exposed. They decide. Not you, not me, not Google...the copyright owner decides.

...

In the real world, is that true?

All the bits and bytes and clips and chunks of images, music and video thrown around the web at a moment's notice by anyone who wishes to make a solitary decision?

I understand it's a desire for copyright owners, but in realtime it just ain't like that - not entirely anyway - which I guess is what these scraps are all about.

I'm just suggesting that your statement above also includes a theory, one that is not universal. Like the poster suggested, the RIAA beat Napster but no-one's saying that music piracy is legs-up and dead, which can only suggest the current model is still a failure, regardless of real-world expertize, strategies and practices.