Big Media is Buying into YouTube Networks; IP Battles May Loom

New sources of content created independently, produced cheaply and distributed on YouTube are challenging network and cable TV dominance.

The impact on copyright and brand licensing is unclear.

If you are over 25, or so, you may be too old to notice it, but changes are taking place that are altering how and by whom television content gets developed and delivered to different audiences. It’s no surprise that YouTube, a once fledgling music video portal owned by Google, is at the center.

In a compelling cover story in the current Bloomberg Businessweek, “YouTube: Hollywood’s New Hit Factory,” the magazine looks as how new technology and shifting demographics (and shrinking attention spans) are changing television and content as we know it. The future of youth entertainment, the magazine reports, is not in broadcast or cable TV but in short-form digital videos, particularly on YouTube. The article steers clear of copyright and trademark issues, but those are sure to follow.

Several of the Top 30 YouTube Networks already are in play. AT&T, Disney, Warner Brothers, Hearst-Fox and Comcast all have either bought YouTube networks or are considering it.

Just how popular are these fledgling networks? Maker Studios, for example, which was bought by Disney for $950M is ranked number three with more than 33 million total unique views. (See the Top 30 YouTube Networks guide here – very worthwhile.)

It’s difficult to say whether MCNs (multichannel networks) will simply remain a “minor league” for the network, cable and even feature film industry, or it will be a viable medium of its own. If it can get organized and the revenue can be generated, I’m betting that it will evolve into a viable medium the way cable has.

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Google bought YouTube for $1.7B in 2006 and focused on improving the sites technology and fending off copyright suits. Not it appears many of those who were fighting it are joining the party. YouTube has started to take an active role in original programming, encouraging entrepreneurs, producers, and established TV stars to start channels, which on YouTube refers to a collection of videos hosted by an individual or by a creative team.

“Rather than create all the programming themselves,” reports Bloomberg Businessweek,”the MCNs were recruiting tens of thousands of independent YouTube creators, from the semi-prominent to the obscure. Each of the MCNs offered a slightly different slate of services, but they generally promised aspiring YouTube talent that, for a cut of gross revenue (typically 30 percent), the MCN would get them more attention and make them more money. Sign up with us, kid, we’ll make you a star.”

Authors and some musicians, many prominent, also have been bypassing traditional distribution channels for self publishing. Controlling the rights to content will not be easy, but it can be done.

While it looks like more opportunities for artists and and content providers, such as writers, musicians and comics, it remains to be seen what these deals will look like for them and how much control will they maintain.

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“With summer TV ratings falling, the domestic movie box office down sharply, and upfront sales of TV advertising surprisingly weak,” Businessweek continues, “a slew of mergers, acquisitions, and investment has shaken the YouTube cosmos. Big media companies, which a few years ago were furiously filing copyright lawsuits against YouTube, are jostling for a piece of the action.

“DreamWorks—the studio behind animated franchises such as Shrek, Madagascar, and Kung Fu Panda—has landed on Planet YouTube with a healthy respect for the native culture.”

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With the early upfront costs defrayed by talent agencies, Hollywood studios, and Google itself, in exchange for a piece of the action, the rights on content and brand deals are important parts of the narrative yet to be told. Stay tuned.

Image sources: turnstylenews.com; tubefilter.com