YouTube barter economy: Where is the cash?

While it is a favored past time to ruminate over how much cash YouTube’s “clip culture
Written by Donna Bogatin, Contributor
Last week, the New York Post put a $1.5 billion rumored for sale price tag on YouTube, up 50% from its $1 billion “name your YouTube sales price” target from a few months earlier.

While it is a favored past time to ruminate over how much cash YouTube’s “clip culture” will command in a sale, content companies currently doing “business” with YouTube are hard pressed to command any cash from YouTube, given its new barter economy.

In “NBC on YouTube: great for promos, but no money in sight,” I report on my questioning of Beth Comstock, President , Digital Media and Market Development, NBC Universal, on Monday about the lack of financial compensation in the NBC-YouTube cross-promotional barter deal:

Does NBC get paid from YouTube for the right to use its copyright content?
Does YouTube get paid for the promotions it does for NBC?

Comstock replied that the NBC-YouTube arrangement is purely a “promotional” one, no money changes hands between the two companies.

I indicated that besides NBC, YouTube has a "deal" with Warner Music; I posited that perhaps the reason Universal Music has not been able to arrange a “deal” with YouTube is that it seeks tangible money for its content rather than intangible exposure.

In “Showing on YouTube: NBC spokesperson Jay Leno” I illustrate the YouTube-NBC cashless barter deal in action: Jay Leno does a “Videos we found on YouTube” promo segment for YouTube on the “Tonight Show” in exchange for YouTube posting a “clip” of Leno doing the promo for YouTube!

What does John Miller, Chief Marketing Officer, NBC Universal Television Group, say of the cashless barter deal? In “YouTube now 'entertainment destination': partners with NBC, courts CBS” I cite the NBC exec:

The YouTube and NBC partnership symbolizes what can happen when traditional media companies and new media companies find common ground. YouTube is the perfect online media partner to promote NBC's marquee entertainment to their audience and explore new and creative ways to harness the power of viral video in a manner that respects copyrights. We applaud YouTube for their continued willingness to work with us to remove any unauthorized NBC content and protect our copyrighted material.

YouTube should be “applauded” for a “willingness” to respect copyright? Isn’t the company obligated by law to not infringe on copyright? YouTube only respects copyright if a content owner agrees to a cashless barter deal which serves to promote YouTube? Doesn’t that reflect a self-serving disregard for copyright law?

Universal Music Group recently indicated that it will not stand for YouTube’s copyright infringement, as I discuss in “YouTube, MySpace at risk: UMG seeks millions of dollars from 'copyright infringers'”:

We believe these new businesses are copyright infringers and owe us tens of millions of dollars. How we deal with these companies will be revealed shortly.

YouTube even seems to be falling short of removing unauthorized copies of NBC content. A search on “NBC” at YouTube yields many NBC promo clips for its shows uploaded by YouTube “member” NBC as well as:

“Miss Universe 2006 NBC” uploaded by “nunum999”
“Diana NBC Olympic Interview” uploaded by “katysue7”
“Xandria-Ravenheart (Live Unplugged at NBC)” uploaded by “thenomad15”…

Why are the unauthorized NBC clips still on YouTube? YouTube hasn’t identified them? NBC is “OK” with them?

In announcing its “deal” with Warner Music recently, YouTube touted a "sophisticated content identification system” it plans to introduce:

Advanced Content Identification and Reporting Architecture to be Delivered by End of Year

By the end of the year, professional content creators, including record labels, TV networks and movie studios, will have the opportunity to authorize the use of their content within the YouTube community by taking advantage of YouTube's new content identification and royalty reporting system.

YouTube has been actively working on the operational details and building the infrastructure for this innovative new framework which includes royalty tracking and reporting, and a sophisticated content identification system. This new architecture will offer media companies the following:

  • Sophisticated copyright identification tools to help identify their content on the site;
  • Automated audio identification technology to locate their works within user videos on the site;
  • The opportunity to authorize and monetize the use of their works within the user-generated content on the site;
  • Reporting and tracking systems for royalties, etc.

YouTube’s announcement does not indicate that YouTube plans on implementing its forthcoming “sophisticated copyright identification tools” for the benefit of all professional content creators. YouTube suggests that its “advanced content identification and reporting architecture” will only be made available to those companies agreeing to its “deal” terms.

Universal Music Group apparently has not acquiesced to YouTube’s cashless barter economy.  

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