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Summary:

YouTube’s place in the online video ecosystem could change dramatically, if today’s rumors that it will acquire Next New Networks are true. The two companies already have a relationship beyond distribution, and if they were to merge, it would possibly have ramifications for other content providers.

antoine dodson

YouTube’s place in the online video ecosystem may soon change dramatically, if a rumored acquisition goes through. The New York Times reported Wednesday that YouTube is in talks to buy Next New Networks. The two companies already have a previously established relationship beyond just distribution, but if they were to merge, such a deal could have major ramifications for YouTube’s relationships with other content providers.

The price YouTube would be willing to pay and other details of the deal are unclear, with the Times saying that no agreement has been reached yet, and YouTube and Next New Networks both declining to comment on “rumors and speculation.” Even unconfirmed, though, the general take on the potential acquisition was largely positive today: The Times pointed out this would be a first for YouTube, representing a major step forward for YouTube’s larger content ambitions, and could also benefit platforms like Google TV.

We got in touch with Howcast, another creator of content using YouTube as a distribution platform, and the company’s SVP of Business Development Alex Allerson didn’t seem worried. “It’s super encouraging,” he said, to see professionally produced content to be valued like this, adding that Howcast wouldn’t mind direct competition from YouTube.

“The pool is very big,” Allerson said, adding that “users gravitate to what they like to see.”

Machinima.com CEO Allen DeBevoise, via phone, also wasn’t concerned, noting that in the cable world, companies like Time Warner serve as distributors while also owning content divisions like HBO. “YouTube has to tread those waters carefully,” he said via phone. “But if you do it right, you have a church-and-state-type separation.”

The deal, to DeBevoise, would show YouTube’s investment in the space, as well as “validation that brands within YouTube really matter.”

Without confirming the deal was actually happening, Rebecca Lando, who produces the shows Working Class Foodies and MSN Film Fan for Next New Networks, commented on her Tumblr that:

As a Next New Creator, this sounds awesome to me. To create content curated by YouTube? Or even just to know that YouTube is possibly taking a more active interest in higher-end shows, beyond just everyone and their mom flinging webcam rants onto YouTube’s servers? I can only see positives from this, for everyone from web video creators to potential sponsors to the audience.

Next New Networks clocked some 1.2 billion video views in 2010, and the company scored the top two spots on YouTube’s list of most-watched videos in 2010, thanks to Auto-Tune the News and Key of Awesome. It has a long-standing relationship with YouTube, one that has already gone beyond straight distribution partner.

Last fall, when its Barely Digital channel launched the music video parody series Key of Awesome, it did so as part of a pilot version of the program that later became YouTube’s Partner Grants. YouTube Partner Grants, which were officially launched this summer, is a system by which YouTube offers cash advances against future revenue the creator would make as a YouTube partner. NNN, in short, created a new series using money borrowed from YouTube.

As YouTube viewership grows, it will depend more and more on the professionally produced content its audience now demands, with viral videos being largely replaced on the most-viewed charts by music videos and shows from Next New Networks and its competitors. Efforts like the YouTube Partner Grant program and other tools to help creators make more polished videos reflect that the company knows the importance of professional-level content, and acquiring Next New Networks would be another step in this direction.

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  1. If the deal goes through, will be interesting to see how much favoritism Next New Networks content will get from YouTube.

    Will NNN content be promoted all over the homepage and at the top of organic search results?

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    1. With questions about Google promoting its own services above those of competitors in other verticals, I wonder about this as well. I also wonder what this will mean for Next New’s ability to continue operating independently, but that remains to be seen.

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  2. This sounds like another evolutionary step by YouTube. More along the lines of evolving to the studio system of old Hollywood, but that’s not all bad as long as they keep at least one door open (or one eye on the outlook) for new content producers. I was hoping they would try to operate like Hollywood does today where content producers can come in pitch, but maybe YouTube needs to evolve through this step first. Experience the reasons why Hollywood abandoned the studio system.

    In reading your other article about the YouTube Partner Grant program (http://gigaom.com/video/youtube-partner-grants-already-proven-thanks-to-key-of-awesome/), it would be interesting to know if the content producer doesn’t make back the investment if they have to pay what they didn’t make back back. If they don’t, then I think it can be called a “grant” program. If they do have to pay back, it should be called a loan program.

    Another thing that would be interesting to know about the YouTube Partner Grant program is whether or not YouTube then owns some or all of the rights to the material their grant funds. Anyone know?

    I’m planning on uploading my animated show to YouTube for essentially showcasing purposes to the broadcast and cable TV networks, but if I am picked up by and make as much through YouTube Partner Program, get future episodes funded by YouTube Partner Program, and possibly get a huge infusion of capital to take my production company to the next level through partial or full acquisition by YouTube, my show might be better off not getting picked up by a broadcast or cable TV network. Regardless…

    Interesting read.

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    1. Typed: “get future episodes funded by YouTube Partner Program,”

      Meant to type: “get future episodes funded by YouTube Partner Grants,”

      I sure wish we could edit our posts after we post them. :-P

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