Taking on YouTube

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It’s gang-up-on-Google time. The most popular kid in the internet playground is suddenly up against an increasingly jealous peer group. News Corporation and NBC Universal have taken advantage of this. The two media giants managed to corral the other four internet giants (Yahoo, AOL, MSN, MySpace) into a distribution deal that could give their new online entertainment service a huge audience from day one.

The threat of Google’s YouTube was no doubt helpful in forming the alliance. Its creation is important for two reasons. First, the internet groups are making clear they want to create a legal mechanism for using mainstream media content and sharing the advertising revenues. Contrast that with YouTube’s aggressive lawsuit from Viacom over the unapproved use of content.

Second, the distribution deals give the new service a more credible chance of success. Previous attempts by the likes of the music and airline industries to form online hubs have struggled. In this case, even if the new website itself does not gain traction, the version offered through the online distribution partners could provide a strong base.

The devil will be in the detail. How will advertising be placed alongside content to avoid alienating users? How will revenue be shared with distribution partners to ensure they promote the service aggressively? How much flexibility will there be for users to watch short clips – something that has helped make YouTube a big hit – rather than full-length shows?

The venture has other challenges, such as proving that the partners really can work together and that it can lure in other content providers. It is by no means a sure thing. But the way it has been structured, with broad distribution agreements, makes it probably the best shot at creating a legal hub for online entertainment so far.

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