A lot of attention has been paid here and elsewhere to the notion that major media companies were planning a MeTooTube. But the venture actually being created by NBC Universal and News Corp. goes far beyond — it’s more like the anti-YouTube. From the gate, this venture is aimed at high CPM and highly distributed advertising along with the video and social tools. The players involved don’t need to build distribution and brand — they start with both. Launch distribution partners already signed on are AOL, MSN, MySpace, and Yahoo. They’re not trying to build a site that relies on user-created or user-uploaded content. What they’re planning is a premium content site that’s ad supported from the beginning but, according to an executive familiar with the distribution side, also will grant some rights to users. The executive: “That’s another way we finally get it — it will be mixed up and mashed up.”
For now, the bulk of free distributed video content is user generated. The primetime shows, for the most part, require going to a destination site; those that allow ad-supported access to multiple sites are still limited — for instance, Fox programming on mySpace and Fox local sites. Instead, this executive and others say success counts on taking the programming to places people care about. Some more aspects of the venture:
Equity contributions: NBCU is contributing NBBC and cash to the venture; News Corp. is contributing cash and likely will make certain technology available like that of its recent FIM acquisition SDC. The amounts are higher than the initial $25 million per company estimated when more equity partners were involved.
Acquisition fund: While some of the money will go marketing and promotion, some also will be used for acquisitions. I was told to think of it as an acquisition fund for the partners, primarily for technology (ad technology, metrics, etc.); some content buys could be possible but that isn’t where needs lie. They already have the video player so don’t need to acquire a company for that.
MySpace: MySpace needs to up its CPM and its appeal to advertisers. For all the puff, its vast amount of user-generated content isn’t doing the trick. MySpace needs something more and News Corp. think this is it. Keep in mind that MySpace has a deal with Newco as a distribution partner. It will share revenue with the company while News Corp. gets another share as an equity partner in the venture.
Rev Share: Speaking of revenue sharing, we’ve heard from multiple sources that the split runs very high in favor of the venture; as high as 90-10. The argument is the distributors need premium content and should be willing to pay for it. In addition, they also have had to promise a major presence for the content.
The real ClownCo: One executive familiar with the deal picked up on the report that a Google exec had called the proposed company “ClownCo.” — a play on the “NewCo” nickname: “The ClownCo stuff is hilarious