YouTube – Big Media Video: Revenue Splits and the Real Stumbling Block

In Sunday’s New York Times, Richard Siklos provided some detail on the contemplated revenue splits for BIGMEDIAVIDEO.COM (the NBC/News Corp. theoretical consortium) and YouTube and its content partners.

He also suggested (as the Times has previously) that the real stumbling block in the Big Media-YouTube negotiations is not money but control: The Big Media folks can’t live with the idea that someone else (GooTube) will sell advertising against their content.

According to Siklos, the revenue splits between BIGMEDIAVIDEO.COM and its distribution partners will be 90%-to-BIGMEDIAVIDEO and 10% to the distribution partner.  This is interesting, but it leaves out the most important split, at least w/r/t the YouTube-Big Media negotiations: The split between BIGMEDIAVIDEO and the specific Content Owner.  Will each partner in the consortium contribute the same amount of video?  Will they own the same amount of equity?  Will the revenue splits be the same for all BIGMEDIAVIDEO content providers?  If not, the consortium is especially doomed to failure.  If FOX’s videos are more popular than NBC’s, why will Fox sit by and allow its competitor to benefit at its expense?  (Sorry, but this BIGMEDIAVIDEO thing is DOA).

Siklos also reports that the split between YouTube and its content owners is 30%-to-YouTube and 70%-to-the-content-owner.  This seems reasonable, especially if YouTube is shouldering the costs of selling and serving the advertising (or perhaps the split is after overhead).  If this split were the only hang-up, every major media would probably rush to do a deal with YouTube. 

According to Siklos, however, the larger issue is control: Big Media folks revere their relationships with advertisers, and they don’t want someone (Google) getting between them.  In my opinion, if Big Media wants to survive in this new world, this is something they’re going to have to get over.

Posted by Henry Blodget

http://www.internetoutsider.com/