YouTube partner ad sales could spur Viacom talks

John Shinal · April 8, 2008 · Short URL:

 News that YouTube is allowing certain video producers to sell their own direct ads could take a major issue off the table and possibly help spur settlement talks between Google and Viacom, whose $1 billion lawsuit still hangs over the future of the world's biggest online video site.

It also suggests that if Viacom had been more patient, it might already be monetizing some of the hundreds of millions of page views its shows had been getting before it started forcing YouTube to take them down. 

Jordan Hoffner, director of content partnerships at YouTube, talked about YouTube's ad policy with Daisy Whitney, a reporter for and video blogger at NewMediaMinute. We first saw the news when Andy Plesser of flagged it.

According to Hoffner, YouTube only sells ads with partners with whom YouTube has an "economic relationship." Translation: 'hey Viacom, spend more time negotiating and less time filing legal briefs and we can both make some money here.'

"Sales conflict is a big issue for partners. We want to eliminate that and let them control the inventory," Hoffner told Whitney.

When I heard that, I couldn't help remember what Viacom CEO Philippe Daumann had told the audience at last year's All Things Digital conference.

When asked for the reasons why he chose to sue YouTube, rather than work out licensing deals as other big media companies had done, Daumann said that Google wanted direct relationships with Viacom advertisers.

Those relationships were hard-won over the years, and the company wasn't about to just hand them over to another company -- especially to sell against Viacom's own original content -- that in his view was stepping all over his own copyrighted material.

Now, given how much is at stake -- nothing less than the legal precedent that could shape the online video market -- both sides might be willing to go to court just for the sake of principle.

The outcome will affect the business models of a wide range of companies, from online video companies like Video Egg to video ad companies like BrightRoll. 

You can hear more about the state of the online video ad market here. 

But Hoffner's statements are a reminder that -- contrary to many reports -- some media companies are making some amount of ad revenue from YouTube.

While it may not be enough to keep the two sides out of court -- or get NBC and Fox to abandon Hulu -- these are still early days for online video ads. If YouTube continues to dominate video page views, Google may be able to establish it as a viable revenue stream for the media giants and deter them -- or at least delay them -- from going through the expense of building and marketing their own. 

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