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So many messages, so little time ... everyone has spin to share now that the NBCU-News Corp. has been unveiled—why they’re in, why they’re not, why they might be, what it means and more.
Content partners: The effort to bring together content partners beyond the original two kept the deal on hold for months. Moving past the idea that other content providers had to be involved at launch—or as one executive familiar with the deal told me when “we finally got freed up to talk to the distribution partners”—turned out to be key. The theory: with distribution locked in on favorable terms, content partners would follow. Content partners can come in two forms: equity partners with exclusivity required or, as we reported, non-equity, non-exclusive.
But why sign with competitors and give up control, someone from a non-participating media company asked me. I put that question to the executive who was explaining some aspects of the deal to me and got a multi-part answer only made possible by the distribution deals:
-- Content partners coming in now will have “extraordinary content protection—IP protection that they hadn’t before. ... Any distribution partner is already signed up to protect your content.” The executive said all of the partners committed to protection beyond the requirements. The deals include filtering of all user-uploaded video. “If you’re getting paid for Heroes on someone’s profile page why would you let the same clip be uploaded by someone?” One more point: “The content-protection language was negotiated long into the night for the last three nights—no other (prospective) content partners know what we’ve got.”
-- a “really favorable rev share on the advertising” (We have confirmed independently that split is 90-10 for equity partners.)
-- “the opportunity to opt into a network that gives you immediate access to 96 percent of U.S. internet users”
-- “total autonomy” to do their own deals and the ability to opt out.
Here’s what a couple of potential content partners had to say publicly:
Viacom, which was courted for the venture but went its own way: “A new online video distribution platform that respects copyrights is a welcome addition to the industry. The venture supports our view that upholding the rights of content creators is the only logical and legitimate path for the creative and technology communities to come together and bring great new online experiences to consumers.”
CBS was put off by the idea of exclusivity for equity partners but this statement seems to leave room: “CBS continues to pursue its interactive distribution strategy by partnering on an open, non-exclusive basis with best-in-class, next-generation platforms in order to reach and learn about its audience and get paid for its content worldwide.  As with all existing and potential partners, we will continue to discuss opportunities with NBC and Fox to determine if we can work together in the future, and we wish them well.”
Distribution partners: So why would distribution partners take 10 cents on the dollar in this deal?
MSN: Adam Sohn from MSN Video was careful to say in response that he wasn’t confirming that split when I asked but admitted the income, while new, would be incremental. So why do it? Microsoft has been investing in a two-part video strategy—licensed content for MSN Video, user-generated content through Soapbox. Newco brings a large library to MSN Video, the ability to sell ads against the branded player although Newco will sell its own ads inside the player, and reasons for people to spend more time on the site. Sohn said existing deals with Fox and NBC continue as is unless the parties agree otherwise. The copyright protection requirements matched Microsoft’s own thinking; as we wrote earlier today, the company is putting Soapbox back in private to add a content filtering layer.
AOL (Google owns 5 percent of the TW subsidiary): Some notes from an AOL spokesperson show why the portal was interested: “This site’s videos will be directly integrated into the AOL experience. Users will be able to easily play videos from this site without having to open an additional window or leave AOL’s site. For example, you might be able to read a story about Keifer Sutherland in AOL’s celebrity news area and, with one click, watch the latest episode of 24. (Someone suggested to me that AOL’s entry was because of Randy Falco’s NBC connections but once MSN and Yahoo were on board I think AOL had to come on board.)
Google: No, Google hasn’t signed on yet but CEO Eric Schmidt called Peter Chernin and Jeff Zucker this morning to suggest talks. Plans are already underway to continue discussions. Google could slay a lot of dragons by signing with Newco since that deal includes filtering and copyright protection.
Comcast: One of the largest ISPs and content distributors; it would make sense but Comcast may not like the split. On the other hand, Comcast also could be a content partner.