News Corp-NBC Plan Good for Business, Bad for Users

NBC and News Corp.'s newly-announced video distribution network is a good idea in theory and will succeed in putting pressure on Google. But even though the network will reach 96 percent of Internet users, the user experience won't be that great.

Google's goal with YouTube is to incentivize media companies to provide content. Google does this by following a strict interpretation of the DMCA--basically, only removing copyrighted content when it receives a DMCA request. This upsets the media companies--NBC, Viacom and UMG have been the most vociferous--but in Google's eyes, media companies can't afford to not sign up with YouTube, the Web's biggest single site distribution platform.

But now, almost six months after Google bought YouTube, the media companies are calling Google's bluff. By creating their own online distribution network, News Corp. and NBC are providing a counter-incentive to content owners, one that provides better IP protection and built-in advertising.

The result won't be a battle over traffic. It will be a foundation for demonstrating a legitimate video distribution system. In that sense, Google/YouTube loses some--but certainly not all--bargaining ability with would-be content partners, who now have another major outlet. Also remember that Google is only able to sell advertising around licensed content. The fewer partners Google has, the fewer ads it can sell.

This is not to say that deciding who to partner with, Google or News Corp.-NBC, is a zero sum game. If News Corp.-NBC sucessfully executes this plan (a big if right now), content owners could potentially place their video on both. CBS, for example, has been following a similar strategy, offering content on YouTube, through iTunes and other outlets.

And then there's the question of search. Google wants to keep all eyes on YouTube because Google only offers effective video search for YouTube and Google Video. True, you can use Google's core search function to find video on iFilm and Metacafe and other sites, but it's a messy, hit-or-miss process that returns a lot of blog posts and news articles, too. The more video distributed outside that walled garden, the less effective Google search becomes.

Unfortunately, it doesn't look like these developments will be all good for the consumer. The reason casual browsers love YouTube is that it provides a one-stop shop for finding any type of video. But those days are rapidly fading away. Coming soon, Newco's distributed video across MySpace, AOL, MSN and Yahoo will together reach 96 percent of the Internet audience, but each of those, regardless of assuarances today, will offer different types of content, different qualities of search and different user experiences. And, oh yeah, advertising, no doubt in the form of pre-roll and mid-roll spots.

So, oddly enough in this case, more marketplace competition will likely result in a worse experience for the end viewer.

This was inevitable. And it'll be messy.