For the last twenty-four hours we’ve been reporting a nearly non-stop stream of facts (and some speculation) about the new, unnamed News Corp./NBC Universal joint venture to launch later this year. First the rumor, then the confirmation (and press release), then our real-time, undigested notes on the media/analyst call.
Here’s a summary of what we know so far, which doesn’t suggest this thing will be a winner. And since the company is yet to be named, Google’s inside moniker for it, Clown Co., may stick if they’re not careful.
BackGround
For some months, at least since the Google-YouTube acquisition, a number of TV networks have been discussing the creation of some sort of alternative to YouTube. News Corp. in particular was incensed by the fact that yet another company was launched on the back of their MySpace property, and was showing copyright-violating clips of news Corp. content. When they realized just how valuable YouTube was ($1.65 billion in Google stock), they started serious discussion around building a clone (and at this point, sources inside of the networks were talking about a clone, which is much different than what they are now saying they’ll launch).
But in the meantime, Google got serious about negotiating with the networks to get their content about YouTube. Everyone waited for the first big network to fall, assuming the rest would follow. As the year drew to an end, though, no deals were done. Nobody blinked.
Then the counter-punches were thrown. Viacom issued over 100,000 DMCA takedown notices to YouTube and then promptly sued them for $1 billion six weeks later. In the meantime, NBC’s brand new CEO, Jeff Zucker, slammed YouTube in his first days on the job. Zucker used language that was so similar to Viacom’s, that it appeared to be an orchestrated strategy between the two companies.
News Corp. and NBC now say that negotiations continued during this period, with various networks joining, leaving, or sitting on the fence. The key to getting to a deal done was getting the right distribution partners in place so that the venture could claim a very large audience. This week, the distribution partners came to agreement with the networks. AOL, MSN, MySpace and Yahoo (Google’s primary competitors, plus News Corp.’s MySpace) were all on board.
Facts About the Company and Service
There are still a lot of “unknowns,” even after the media/analyst call today. The new company is a 50/50 joint venture between News Corp. and NBC Universal. It will be located in New York and Los Angeles. NBC Universal’s Chief Digital Officer, George Kliavkoff will transitionally head up the new entity at launch, with permanent management coming soon. Some large initial advertisers have also been announced (Cadbury Schweppes, Cisco, Esurance, Intel, General Motors, Royal Caribbean).
The service will feature content from NBC and News Corp., and user-generated video. Both television as well as film titles will be available. Some content will be free, some will cost iTunes-like prices. The company will welcome other content providers, but they said they would be hesitant to add more equity partners to the joint venture.
There will be no centralized site for the service. Instead, content will be available through distribution partners, who will also receive a small share of advertising revenue. The company also said they will be looking to add many more distribution partners, and users will also be able to embed content (along with advertising) directly into their sites.
Many shows, such as American Idol, will not be available since they are not under the control of NBC or News Corp. Shows that are included will become available a few hours after they are first broadcast.
Pricing (and what is free) is still very unclear, as is exactly how advertising will work. At the very least, users can expect to be able to watch streaming content on demand from the service. This in itself will be compelling for many users, although with mandatory advertising simply recording shows on Tivo, or using pirated content, will provide a superior user experience.
Broken Messaging and Wasted Press
A number of red flags were raised during the media/analyst call today. The general attitude of Peter Chernin and Jeff Zucker was joviality, bordering on arrogance, and a number of times laughter broke out on the call. One example is when a reporter from MSNBC, when asking a question, started with “Hi Boss” (referring to the fact that NBC owns the property). For the most part, the reporters who were allowed to ask questions (we were not) were throwing softballs.
The two key messages Chernin and Zucker were selling were (1) a focus on respecting copyright, and (2) the fact that they were creating what they called “the largest advertising platform on earth.” That may be good messaging to stockholders, but it isn’t what the public cares about.
I think a better approach would have been to focus on the user experience, but this was hardly mentioned (except at one point when Zucker said “we are shocked at the willingness of the consumer to sit through the whole show with ads on NBC.com”). It’s either arrogance or it’s blindness to the reality of this Bittorent and YouTube world. Either way, it suggests they are in over their head.
There are really big challenges ahead for this company. First, the fact that only two networks joined is a really bad sign. Viacom at least should have been willing to join. Second, this group has little experience in creating web applications, and no experience building the kind of stuff, like YouTube, that users get seriously passionate about. Third, the track record of major media companies working together to deal with this kind of viral attack on their business is not good. As Valleywag pointed out today, EMI, BMG, and Sony Music banded together in 1999 to deal with the Napster situation and created Musicnet, which was a dismal failure and was named by PC World as one of the worst tech products of all time.
Today was just a placeholder announcement for this yet-to-be-named company, and more details will certainly emerge soon that could show this in a new light. But for now, Google/Youtube, who have been referring to the project as Clown Co. privately, doesn’t look to be in any trouble. Without a name, a lot of the press today was wasted. My recommendation to interim head George Kliavkoff: name this thing fast, before “Clown Co.” becomes more than just an inside joke at Google.
Wow! Very interesting… Clown Co. might not be a bad name after all — It’s catchy! I wouldn’t forget the URL… but wait, there’s no destination site is there
Perhaps they’ve already named it, although, the whois record showing DomainsByProxy isn’t that legitimate looking…
http://who.goda...prog_id=godaddy
I’m sure the actual Clown Co will be keen for this to get a name.
http://clownco.com/
Its like utube.com all over again.
Clown co. very drole
I bet they all spend a few months arguing over the name anyway. This is bound to be youtube by committee
“Second, this group has little experience in creating web applications, and no experience building the kind of stuff, like YouTube, that users get seriously passionate about.”
That’s true… but one of them does own a little site called MySpace. So they certainly have experience in running sites that users are passionate about. And MSNBC is second biggest general news website behind Yahoo!, I think, so both companies have experience running successful web properties.
I hope that only excepting the posts in the RSS feeds is only a temporary thing. I want my full text feed back. Put ads in the feed if you must, but I don’t want to have to open up every single post I want to read separately.
Isn’t it a bit strange – and maybe just a wee bit offtopic
– that VIACOM picked up their toys (100,000 videos) from YouTube, filed a suit against them and then moved to JOOST? I mean, doesn’t a centralised hosting service such as YouTube have a slightly better chance of managing content than a peer2peer distribution/bittorrent-y service like Joost?
Since the corporate monster will probably be founded on lots of lawsuits, I propose the following name:
SueTube.
@Laurel: you didn’t understand how Joost works. It will have no user-uploaded content. The P2P protocols will only be used (due to their efficiency) for actual delivering of the content, not for sharing. The content on Joost will be 100% controlled by the owners.
they should just buy up slacker.com and kill two birds with one stone
Mike:
1) How can you call arrogance on them when it was the reporter who said “hi boss” and actually nothing that they said.
and
2) You say they have no experience building web applications. It ain’t hard. And who said that Myspace, YouTube or Flickr had any experience before they gave it a go?
Since it is only US-focused, could be US Clown Co. …… or USCloCo for short ….
@zoostar
I think the point was that the heads of the two companies seem to think a pretty flash site with some video is all they’re going to need at Clown Co. They haven’t built a thing and they’re announcing the “biggest advertising platform on earth”?
Also, these idiots have no experience with web apps and chances are, unlike Flickr, YouTube and several others, they will eff it up. You can already see it. Anytime you spend the entire conference call talking about DRM, copyright, and ads instead of users, your strategy is shot. You know what they should’ve done? Bought an existing network like Metacafe or Brightcove. Instead they’ll go it alone and … its going to be ugly.
As for the name… its too late. They’ll forever be Clown Co in my mind.
Someone please give me a Joost invitation…
Agree with many of your points. But, we’ll see how the consumer reacts and what type of a product comes out. I don’t care much for TV, I only watch either 24, The Shield or sports-related events. Otherwise, most of the content on TV is crap. YouTube is still strong and will grow stronger with user generated videos. I believe AppleTV will be part of an infrastructure that will make both user generated videos and other content streamed to the TV. So, I don’t think that Clown will be the YouTube Killer.
http://flickr.c...cart/431326690/ A little “Clown Co.” logo to get the whole idea… Feel free to use it.
veritas : i have Joost invitations… if you want one mail me at pierre.foucart-at-gmail-dot-com.
When I read about what they’re planning to do I just see a train wreck about to happen. And the train is carrying lots of money. All in notes. And they’re on fire…
A DRM-ed video full of adverts. Man, how can I get myself some of those! (And this is coming from someone who runs a site that only features videos. You’d think I’d be excited by the prospect of a streaming episode of ‘Heroes’ but sadly no. Not in this format.)
No smoke without fire.
http://www.tekn...ld.blogspot.com
Height Of Arrogance!
Google just lost my vote and attention. Can they be any more arrogant than to call a “yet-to-be-launched” company/site such names? Youtube would probably be out of business had they not been bought by Google. They are not acting like good prospective partners to media companies, rather, they seem intent on antagonizing them even more.
I think Google made a mistake with Youtube and this attitude tends to highlight one of the Google problems – arrogance. And, it’s not a little issue to be swept under the rug.
Yay! I hope they stick with the clown theme, especially since they own this guy:
http://en.wikip...org/wiki/Krusty
i would much rather watch snl clips than any of the user generated stuff on youtube. i think these guys have a huge advantage with their content. if they can create a user experience that’s decent, this could be big. broken message? wasted press? probably not a huge success factor.
While no matter how much the NBC – News Corp youtube-clone may suck / may not have a clear plan, I am appalled at Google’s arrogance.
Calling them a clown co. just goes to show how highly they think of themselves.
Lets not forget News corp. bought myspace and under their reign, it became the #1 website in the world. I think at this point, the more sensible option is to wait and watch – News corp and NBC have a lot of original content and it was this copyrighted content which was actually the most popular stuff on youtube.
Ruper Murdoch has a knack for hitting the jackpot..Lets see what he has in store for us.
Ohh and an addendum to the above post…
And when myspace became #1, Google went to myspace, with its tail wagging between its legs – to capitalize on those eyeballs.
I keep reading that Google execs are calling this Clown Co, but I haven’t seen a single accredited citation of that fact. Do you have one, Michael? Have you actually heard a Google exec call this “Clown Co”? Or are you just passing along unsubstantiated rumors?
I would rather they name it veetube.com or what do you think?
“Second, this group has little experience in creating web applications, and no experience building the kind of stuff, like YouTube, that users get seriously passionate about.”
That’s not true.
The team they appear to be assembling has far more experience than the YouTube team did before they launched, in building large-scale, popular, online services – and without the benefit of Lazy Sunday. George K, for starters, had a great deal of success at Real and most recently in helping to build up MLB.com into by far the most innovative and succcessful online sports endeavor. That’s a rock solid, monetized digital media service that’s easy to use, works, and scales.
JVs of this magnitude have their own structural challenges, recall PressPlay and Movielink, but let’s be fair. The team that appears to be coming together starts this project off on the right foot.
This is a fascinating time as a viewer and a citizen of the industry.
The first thing I thought of when reading this headline was the SNL parody commercial for Dillon/Edwards’ website: http://www.clownpenis.fart
Problems:
1. “launching later this year”? It might as well launch next decade, this is the Interweb folks, let me know when it’s launching next week and then I’ll care.
2. No central website? How do you expect to keep up with YouTube when you’ll have a half a dozen ad plastered website’s all competing for ad dollars (oops I meant ‘community’)
3. For the above commentors who think News Corp has the experience because of MySpace, #1 they BOUGHT myspace (didn’t develop it) and #2 MySpace succeeded because of the community (something Clown Co. will have none of) and despite of hit’s horrible tech.
4. The comparisons to iTunes will most likely start, as people will point how how well iTunes is doing and how this model will be replicated with Video. Wrong, iTunes has the iPod and a cool company backing it called Apple (not evil greedy bastards like NBC). iTunes sales are big, but not big enough for all these greedy mofos, and sales still represent probably 1% of the overall music market (the rest still being downloaded for free). Plus GooTube is not Napser and has the funds and the will to fight all of these jokers.
5. The content will be a mix of free and paid, with adverts galore. Let’s work this model out. I’ll go to clownco.com and will be served with text/graphic ads. I’ll then watch “free” video content which will either be promos for full length paid shows or some bullshit I don’t even want to watch which will also be embedded with commercials front and back and maybe breaks as well like regular TV. I’ll then also have the option of “buying” this video which will probably only work on 1 pc, won’t be sharable and will probably have more ads built in, or I’ll still have to deal with ads on the website will I try to navigate and buy the content.
6. Since only a few of the networks are signed up, content gaps will exist.
7. Your average user knows only of YouTube, and barely knows of any competing service (which is why Google bought them). I witnessed this first hand when I told friends I had put vacation videos online, and they replied “I searched YouTube but didn’t find them”.
A little ranty and full of holes I know but WOW, this this will fail miserably. The comments above about community are the most relevant, building an “advertising model” is just technology, it’s nothing without a community. Clown Co. will be a shopping mall, and not one even kids will want to hang out in.
nice assessment MA
The stuff I read (including your notes, which were cool) made it seem that what they want to own most is the embeded player and the advertising that plays around before and after the clip.
As for youtube having an insurmountable lead:
How many people still use napster or kazaa?
If word gets out about this, Crazy Clown Airlines will be a laughing stock!
Josiah, I think that you hit the spot with the lack of centralized portal. I watch a few TV shows, which I download because I don’t own a TV. I’d definitely be willing to go to a centralized portal and watch a few ads to avoid the finding/downloading hassle and to get higher quality video. I want the content, and if they make it easy enough for me, I will be their customer. So will many, many other people.
I’m not ready to call this a failure.
They should name it “MyTube”.
1. YouTube has only made it this far by illegally hosting and streaming copyrighted content – i.e. the content that users want to see. Now that last night’s clips, full length TV shows, sporting events, even full length feature movies will be available on all the major portals (Y, MSN, AOL, Myspace), what’s going to be the added value of YouTube?
2. Who cares if “the site with no name” never has a name? Nobody will go there anyway. Its all about everywhere else…i.e. all about distributing to the rest of the web.
3. Rather than dismissing this project in its typically arrogant way, Google should worry about YouTube becoming “WhoTube?” in 12 months time.
To me, this officially puts the nails in the coffin of YouTube and heres why: A) Cats pissing, 12 year olds rapping and mentos/Coke explosions will NEVER… and I repeat… NEVER earn decent CPMs, CPAs or whatever ad trickery Google has up its sleeve. Most of what’s on Youtube… OK, let me modify that… most of what is highly viewed on Youtube (non-copyrighted) is extremely fringe, marginal content. As such, it will only earn the marginal CPM pennies — like MySpace. Now, if the networks ARE successful they will command the very highest ad rates (in whatever form they end up in). Google’s Adwords system won’t be any advantage here.
Now surely, the Big Boys WILL screw this up. But no matter. If they botch it by DRMing it to death and overpricing full shows, viewers will simply scramble back to their old fashioned, 16:9, HD plasmas to watch “24″. The best content doesn’t belong on a computer monitor anyway – even if you have a 30″ Apple Cinema.
Google’s big mistake in buying Youtube was trying to extert the same strategy which made them what they are today: the guaranteed revenue for exclusivity model. Back in the day, they simply had better technology. The technology was king. In this case, its the networks which have the content and in this arena, IT is king. The technology is the easy part.
The problem with the clowns is that they try to force their out-dated business models and strategy on people that told them a long time ago that “this is not what we want!” Clown-co don’t get it. The music industry (labels) didn’t get it either. DJ’s got it – way back in the 80’s. Now, people ripping, remixing, sharing, and chunking content run the show. Think about it.
This is what Clown-co are saying: “Let’s just re-package it, copyright it, control it, market it, and we’ll win.” Now, that is arrogance, but it also makes sense: This is who these people are. This is their world. Is it yours?
This stuff is too awesome.
http://net9.blo...deo-circus.html
I’m not so quick to dismiss the Clown Co folks. I think the big/old media folks are at least smart enough to copy a lot of YouTube’s interface, which isn’t that hard to do. Besides, as other posters have pointed out, this is a distribution play – it’s the Yahoos and MySpaces that will determine the final user experience, and they are a lot better at it than old media.
The success or failure of Clown Co will come down to viral videos, just as it did for YouTube. Will the big/old media folks be smart enough to allow the most outrageous, viral clips to go up on Clown Co? If they are, then YouTube has got a horse race ahead of it.
Michael,
What else do you call a bunch of clowns doing something that almost everyone agrees is hilarious?
I don’t care whatever hip name they pay some ‘young’ 40 yr old exec to up come with, to me they’ll always be Clown Co. Thanks Google.
Mike, it’s a good point, but I don’t agree that this is really ‘wasted press’ – sure, it’s covered heavily around the blogosphere, but these are huge brands talking to huge consumer bases, and they have plenty of time to leverage the coverage they’ve received so far…
What happened to NBC’s plans for NBBC.com?
From the site:
“The explosion in consumer digital video streaming has created a growing demand for online video content. Content licensors, website publishers and advertisers now have unique opportunities to capitalize on this development.
>nbbc connects the dots.
We’ve built a platform that will allow each of these three businesses to connect and profit from digital video syndication. The >nbbc marketplace generates profits through revenue sharing and fee-based models.
>nbbc is jointly funded by NBC Universal and NBC affiliates. We seek partnerships with all companies.”
“I’m not so quick to dismiss the Clown Co folks.”
such a beautifully complicated statement
Although Michael’s repudiation of News Corp/ NBC shows his too close ties to the Web 2.0 – he is right. This will fail.
News Corp and NBC make their money by the customer lock-in to the television. This model is changing. By driving them to the internet, they are driving them away from their core strategy and they lose their competitive advantage. Even if it’s to their own sites, they are helping to accelerate the changing model. News Corp and NBC’s biggest competitor is MySpace. MySpace has served as a catalyst for YouTube, by shifting teens attention span from the phone/tv model to the myspace/youtube/im model. Once more people are on the web, the game is open. If they don’t work to improve the user experience, then it won’t gain traction.
Blah blah blah. Apparently we just think so highly of ourselves and assume everyone are idiots.
Blah blah blah. The TV world is full of idiots, cause obviously if you’re super duper smart you would be hacking out a Web 2.0 startup or working for Google already.
Blah blah blah. YouTube is so awesome. Blah blah blah.
I just want to watch a decent tv show at a decent time on a decent monitor. I could care less how it’s done.
Hey, I found video from yesterday’s Clown Co call!
http://wamupubl...u_TV_Player.swf
Just look at the finances.
YouTube brought in ~$15 Million last year. This year they will bring in a little more revenue, but since they can only sell advertising on content they have licences for I bet this year hosting is considerably more than revenue.
A&E paid $195 million to replay Sopranos episodes.
Why on earth would any of these big media companies be willing to risk that kind of money for a share of $15 million
Pipe dreams for silly people who are accustomed to enjoy benefits of pirating.
Could this possibly set a land speed record for fastest entry into the Deadpool?
I’m sorry but Michael is right, there is not a good history of large media companies, especially rivals, coming together for a common good.
Poor management and a lack of vision is what got NBC into trouble in the first place and caused it to drop to fourth in the network ratings. Fox has some good shows but their top show, American Idol, isn’t going to be on it? Genius. What else will they do, charge $3.99 for a tv show? Hmmmm, what’s that thing where I can watch tv shows for free….what’s it called…what’s it called…what’s it called…oh yeah, tv.
Throw it in the Deadpool and let’s call it a day.
Well, two years have gone by. How do you feel about your position now? It’s amazing how wrong TechCrunch and a large section of the techies have been.
But what no one seems to realize is that NBC has getting ready for this over the past few months.
Check out the “Viewer Videos” section of (NBC owned) http://www.ivillagelive.com
Then look at the “America’s Funniest Kids” Contest! There are almost twenty submissions. Overall I counted over 100 videos uploaded here.
I ran “NBC Universal News Corp” through the ole Anagram Generator to help in the naming process and came up with some good ones:
CLOWN CAIRN BURNS VEEPS
CONCLAVE BURPS WINNERS
CERVICAL NEWBORNS SPUN
and my favorite:
BRAWN PRINCES CONVULSE
Thankew…thankew
Old guys united, they do not care what young users thinking.