 |
Google Joins Viacom in Web Test of Video Ads
Google has struck a deal to allow Web site owners to put video clips from Viacom, including “SpongeBob SquarePants” and MTV’s “Laguna Beach: The Real Orange County,” on their pages. The clips will be accompanied by advertising, with Viacom, Google and the site owners dividing the ad revenue.
Viacom, one of the biggest creators of television programming, is giving a significant endorsement to Google’s ambitious plan to become a big player in video advertising.
The deal may also be a sign that Google is getting better at dealing with the producers of news and entertainment, which have sometimes claimed that Google uses their content without appropriate consent and cooperation.
After the test with Viacom, which will start at the end of this month, Google hopes to allow any video programmer to use its system to distribute programming with advertising. It also plans to add ad-supported programs to its own video site.
The deal allows Viacom to extend the reach of its video programming to a host of new sites.
Google and Viacom are trying to create a legitimate business model for one of the hottest trends on the Internet: bloggers and others with Web pages are putting video clips on their sites. Many are using sites like YouTube, which store and play back video with little advance review of whether the content is copyrighted. And indeed, many of these clips are recorded from television programs without the owner’s permission.
“There hasn’t really been a legal alternative along these lines,” said Tom Freston, Viacom’s chief executive. “This is the way that people are consuming content these days.”
Already there is competition to provide ad technology for video programmers. And Viacom chose Google, at least in part, because it offered the best financial arrangement.
Eric E. Schmidt, Google’s chief executive, said Google would pay a majority of the advertising revenue to Viacom. “The content owners do the work,” Mr. Schmidt said. “Distribution businesses should get a minority” of the advertising revenue, “and the creator should get the majority,” he said.
An executive involved in the deal said Viacom would receive more than two-thirds of the revenue. (The executive spoke on condition of anonymity because the deal terms were confidential.)
By contrast, most of the other companies that are trying to build video advertising networks — including AOL, Brightcove and Revver — are proposing to pay about half of the revenue to the content creator. (Revver, the smallest of them, has agreed to give as much as 70 percent of the revenue to big media companies, said its chief executive, Steven Starr.) Both AOL and Brightcove have other video deals with Viacom and have discussed providing video advertising to it as well, according to executives involved in those negotiations.
In this deal, Viacom will sell the advertisements through its existing sales force at negotiated rates. Google in general wants to handle selling advertisements for partners in its program, and it plans to use the same sort of auction system it uses for the other ads it sells.
Google will not say what portion of the advertising revenue from the program will be paid to the sites that host the videos. Mr. Schmidt says this is the same policy the company has with its text advertising network. “We don’t give people percentages,” he said. “Just all of a sudden the money shows up, and it’s a lot.”
Brightcove and Revver, which focus on selling advertising on online video, are more explicit; they offer sites that carry the video 20 percent of the revenue. AOL, which has not introduced its similar program, also expects to pay sites about 20 percent.
In return for a share of the ad revenue, and a legal source of video, Web site owners will have to accept limitations under the new program. Viacom will have to approve each site that uses its content, and it wants only sites with at least 100,000 viewers a month. Initial sites include Hiphopgame.com, purevolume.com and Lyrics.com, all of which focus on music and videos.
Also, Viacom is making only three program options available for the sites: short excerpts from SpongeBob, a series of clips from its MTV drama “Laguna Beach” and clips related to the MTV Video Music Awards, which will be held on Aug. 31. The site owner will be able to insert a version of the Google video player that will display these clips. But actual programming played will change from day to day, to encourage repeat viewing. As a result, Web site owners cannot link to a specific clip — say, a certain episode of SpongeBob — and write comments about it, as many do with clips on YouTube.
Still, the site owners will get something YouTube has never given them: regular payments based on the advertising revenue generated on their sites. Julie Supan, a spokeswoman for YouTube, which has become the top-rated video site, said that in the next few months it would start testing the sale of advertising to accompany its videos. It has not settled on how much it will pay the video producers and the sites that carry the videos.
Mr. Schmidt said Google would try different formats for advertisements in its test with Viacom. These include traditional television commercials before or after the clip, as well as somewhat less intrusive formats like static images that appear on the screen when a clip is completed.
He added that Google hoped to use its sophisticated technology to match advertisements on videos to those viewers who were most likely to be receptive to the pitch. Mr. Schmidt said that Google would eventually analyze information about the advertisement, the video program, the Web page on which the video appeared and its vast store of information about the behavior of users.
Google, and other big sites, have been wrestling with how much and when to pay for the use of content. Google, for example, has steadfastly refused to pay sites whose articles are featured on Google News. The company says it is just displaying the headline, the first sentence and sometimes a small photograph from articles on various news sites on the Web. Most sites are glad to have the traffic, but Agence France-Presse has sued Google for violating its copyright on Google News.
And Google has recently signed an agreement to pay The Associated Press to use its content as part of a new service that will include the full text of news articles. Yahoo and other sites have long paid the A.P. for articles they used on their own sites.
In a separate aspect of its deal with Google, Viacom will make full-length programs from many of its networks available for purchase on Google Video for $1.99 each. Viacom has been selling videos through Apple’s iTunes Music Store since last year, and it recently made the same catalog of programs available through AOL’s new video store.
