Hollywood Makeover for YouTube
thinbluemime
Hollywood makeover for YouTube
By Matthew Garrahan in Los Angeles
Published: March 27 2011
http://www.ft.com/cms/s/2/d72f8d9a-589b-11e0-9b8a-00144feab49a.html#axzz1HtnmI73q
Google is deepening its ties with Hollywood by enlisting top stars to
supply original content for YouTube in a bid to boost profits and user
engagement at the company’s online video site.
Google has been making the rounds of Hollywood’s biggest talent agencies,
outlining plans to create a network of channels based around specific
themes or niches, such as fashion, food and video games.
It is offering stars cash advances against future advertising revenues in
return for lending their name to these channels and overseeing the
content, according to people familiar with the plans. It is unclear how
many stars or production companies have signed up.
Google declined to comment although other people briefed on the situation
stressed that YouTube, the world’s biggest online video site with more
than 2bn views per day, was not seeking to move away from its roots as the
home of user-generated content.
YouTube made revenues of $825m in 2010 and is forecast to generate $1.3bn
in 2011, according to research by Mark Mahaney, an analyst with Citi.
Still, in meetings with Creative Artists Agency, International Creative
Management, United Talent Agency, and William Morris Endeavor
Entertainment – the agencies which represent Hollywood’s biggest stars –
Google has made no secret of its desire to add more professional, original
content to YouTube.
The aim is to generate better CPMs – the cost per thousand ad impressions
– for the advertising on YouTube, said a person familiar with the
situation. “Despite the growth in viewership, YouTube is still struggling
to monetise in a meaningful way. They are trying to professionalise their
content to get the attention of Madison Avenue.”
Google recently acquired Next New Networks, which has relationships with
many independent online video producers.
Google has also hired a new team of executives with Hollywood experience
to lead its push into original content. The company last year hired Robert
Kyncl, a former Netflix executive, who negotiated a $900m, five-year deal
to stream movies made by Paramount Pictures, MGM and Lions Gate
Entertainment for the DVD subscription and movie streaming company.
Alex Carlos and Malik Ducard, two former executives with Paramount
Pictures’ digital unit, have also joined Google and are working with Mr
Kyncl from the company’s Los Angeles office.
The new team has already made a big impression in Hollywood. “YouTube is
more focused and they have a better plan than they have had in the last
five years,” said one film executive pitched to by Google.
Google’s push into original content comes as Netflix recently struck a
$100m deal to stream a new US version of House of Cards, starring Kevin
Spacey – before it airs on television.
Facebook, meanwhile, is also eyeing the online video space and recently
agreed a deal with Warner Brothers to make The Dark Knight available to
rent online.
Gheerax IV
> Hollywood makeover for YouTube
> By Matthew Garrahan in Los Angeles
> Published: March 27 2011
> http://www.ft.com/cms/s/2/
d72f8d9a-589b-11e0-9b8a-00144feab49a.html#axzz1HtnmI73q
>
>
> Google is deepening its ties with Hollywood by enlisting top stars to
> supply original content for YouTube in a bid to boost profits and user
> engagement at the company’s online video site.
This is a big fucking mistake.
Technology companies should never, ever, ever, EVER climb into bed with
any part of the entertainment sector, and ESPECIALLY not Hollywood.
They will use whatever leverage they have in whatever deal gets made to
force the technology company to shittify the technology to protect their
traditional business models.
In this case, indy filmmakers often release material directly to YouTube
and similar channels. This stuff directly competes with Hollywood's
product. Hollywood will use their leverage with Google to get Google to
make life difficult for indy filmmakers, and to implement all kinds of
evil limitation-capabilities. Already Google has compromised YouTube in
various ways, including allowing uploaders to geographically restrict
viewing and do other nasty things. Assuming they make a deal like the one
being contemplated here, the addition of paywalls, pay-per-view, seek/
rewind restrictions to enable unskippable ads, device restrictions, and a
lot more DRM couldn't possibly be far behind.
For precedent, look at:
1. Cable ISPs. They're particularly evil on the matter of file-sharing
and throttle traffic carrying video, because the content arm of the
cable company directly competes with those.
2. DSL ISPs. They tend to throttle VOIP, again because another arm of
the company directly competes with it.
3. Sony's video games division: all kinds of evil DRM, legal actions, and
generally shitty behavior w.r.t. consoles, particularly the
Playstation 3, to "protect" their video game software business.
4. Sony's rootkit, MemoryStick DRM, and assorted other bits of nastiness,
which basically began after Sony acquired BMG, an RIAA record label.
5. AOL/TimeWarner. We all know how well THAT worked out for AOL!
Note that between Sony's record label acquisition and Sony's video game
software division, Sony gets a double dose of this particular type of
conflict of interest.
Now these examples do all involve a single company owning both a content
arm (or some sort of legacy business arm, at least, e.g. long distance)
and a technology arm, but a deal between companies that don't merge will
create the same conflicts, and here are two more examples:
6. Hulu. All kinds of problems deliberately created for people using
various kinds of devices to access it; geo restrictions; and lots of
other bullshit, all of which makes it harder and less convenient to
use by a smaller audience. Think of the possibilities for *monetizing*
all the additional traffic Hulu would get if anyone, anywhere, could
watch anything they had for free on any device. Hulu did. Hollywood
said "no, we want to protect our selling-plastic-discs arm, the
bazillions a restriction-free Hulu could make for us are nothing
compared to our billion-dollar-a-year plastic disc operation!"
7. Netflix. It seems to be rapidly sliding down the same hole that
swallowed Hulu now.
YouTube will fit right in with those two if this deal goes through.
The basic problem is this: the legacy arm/company will fight against the
technology arm/company doing anything disruptive that might cannibalize
business, and the compromises that are made will tend to degrade service
and quality while jacking up prices for the products and services of
*both* arms/companies.
And then a third party will swoop in and disrupt the market anyway.
The content company would have been better off cannibalizing its own
legacy business model than letting someone else disrupt it; but out of a
mythic belief that they can keep it "protected", they refuse to.
And it is a mythic belief. They can NOT keep their legacy business
"protected". If whatever that arm does for a customer can be done more
cheaply in some other way it will be. Even if they make it illegal, these
days the internet will make it possible for people to get around that
anyway.
Hollywood could have let Hulu offer everything without restrictions and
collected a chunk of ad revenue; and they'd lose the plastic-disc part of
their business (and keep the box-office part).
Instead, they screwed up Hulu, are screwing up NetFlix, and threaten now
to screw up YouTube, and what will be the end result?
1. Vimeo or similar will take the #1 spot from YouTube for what YouTube
used to do, while with the user-made content viewers/makers moving
elsewhere, YouTube will become a Hulu also-ran. So Google loses.
2. Hollywood will not make as much money as they could have from the
online arena, and they will still lose the plastic-disc part of their
business; the part of their potential online business that they give
up by forcing all kinds of stupid lawyerly/greedy restrictions on it
is not going to show up as DVD or BluRay sales. They will be ceding
those potential customers/ad watchers to The Pirate Bay instead and
they are deluding themselves if they believe otherwise. So Hollywood
loses.
This deal, in short, is a lose/lose proposition for both sides.
Just say no!