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Ben Fritz at Variety has the buzz on Microsoft’s outreach memo:
Looking to strengthen ties with Hollywood as it delves deeper into online video, Microsoft on Tuesday sent a memo to top execs at all the major media congloms offering to work closely with them to combat piracy, but not to implement the kind of filtering technology Viacom is demanding on YouTube.
Confidential memo obtained by Daily Variety was sent by Microsoft to media toppers such as Peter Chernin, Jeff Zucker and Bob Iger as well as heads of the major labels. It outlines the tech giant’s approach to Soapbox, its newly launched viral video service on MSN that is going up against YouTube, MySpace Video and others.
In the letter, media and entertainment VP Blair Westlake said Microsoft is developing “what we believe content owners want and need: industry-leading notice and takedown … practices, including tools that enable our content partners to more easily find content that is rightfully theirs and give us prompt notice so we can respond even more efficiently and expeditiously.”
That’s probably (non-copyrighted) music to their ears except that
Soapbox, which is still in a public beta trial run and has a miniscule amount of content and visitors compared with YouTube, already has numerous copyrighted clips from “South Park,” “High School Musical,” “American Idol” and other TV shows, films and musicvideos.
Still, it behooves Microsoft to stay on the good side of the media bigs since their aspirations for future bounty seem to lie in that direction.
Speaking of which, the latest numbers from Compete show MSN is in 5th place with only with 4% marketshare. YouTube plus Google adds up to 54% and only MySpace with 16% looks like a contender.
Yesterday’s Google acquisition of YouTube is being endlessly dissected today, but Steve Rosenbush has an interesting article at Business Week Online on the implications for Google competitors including Microsoft:
The software giant considers Google a top rival and a threat. Google already challenges Microsoft by creating free online software applications that compete with Microsoft’s spreadsheet software and other products. Microsoft’s MSN site competes with Google in search, advertising, video, and online media, and Microsoft reportedly had an interest in buying YouTube.
Microsoft CEO Steve Ballmer, meeting with BusinessWeek editors Oct. 9, said Google could emerge from the YouTube deal an even stronger rival. If Google can work out a good advertising model with YouTube, he said, it makes Google a stronger competitor to Microsoft. It will have a larger share of the growing online ad market, and can use the cash to create more products like the free online spreadsheet software, calendars, and word processors it already offers. But Ballmer says Microsoft has a long-term strategy, not to mention a history of coming from behind to overtake rivals such as Netscape, the early leader in the browser market. “We’re very long-term. We’ve got a stick-to-it-iveness, a tenaciousness that I would argue is unmatched,” he said.
All quite true and deep pockets certainly help with the persistence, but a lot of checks are being written on Microsoft’s stick-to-it-iveness account lately. I also think it’s interesting that Ballmer focuses on the Google’s free office software as if it were the ultimate objective of raking in the advertising bucks.
So what’s Microsoft to do about online video?
Microsoft has several options. It can continue to try to build MSN as a rival to popular sites such as YouTube. It could also borrow a play from Google and combine its technological prowess in a deal with a content company. While Microsoft’s employees can match Google in terms of technical brain power, it will be tough to find a company that can match YouTube’s cultural appeal and power on the Web. One possible target could be Yahoo!, which is suddenly looking like a laggard in the world of online media. But Yahoo retains a vast base of users and remains a powerful force on the Web.
There are smaller players in Internet video who could be takeover candidates, but they would not add much to Microsoft’s portfolio. Why not think big with a Yahoo acquisition which has advantages beyond just video?
Update: Speaking of stick-to-itiveness, Todd Bishop notes that coincidentally invitations went out yesterday to beta testers for MSN Soapbox, Microsoft’s nascent YouTube competitor.
Update Oct. 11: Business Week has the full transcript of the Ballmer interview here.
This morning’s Microsoft Blinkx tie-up story may have turned out to be a dud, but the Google YouTube acquisition rumor panned out to be US$1.65 billion of gold:
Google Inc. announced today that it has agreed to acquire YouTube, the consumer media company for people to watch and share original videos through a Web experience, for $1.65 billion in a stock-for-stock transaction. Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community.
The acquisition combines one of the largest and fastest growing online video entertainment communities with Google’s expertise in organizing information and creating new models for advertising on the Internet. The combined companies will focus on providing a better, more comprehensive experience for users interested in uploading, watching and sharing videos, and will offer new opportunities for professional content owners to distribute their work to reach a vast new audience.
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When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google’s own fast-growing video business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. With Google’s technology, advertiser relationships and global reach, YouTube will continue to build on its success as one of the world’s most popular services for video entertainment.
The number of Google shares to be issued in the transaction will be determined based on the 30-day average closing price two trading days prior to the completion of the acquisition. Both companies have approved the transaction, which is subject to customary closing conditions and is expected to close in the fourth quarter of 2006.
Marshall Kirkpatrick at TechCrunch has some estimates on how the loot will divvied up.
Update: Todd Bishop has the Microsoft reaction:
Where does Google’s $1.65 billion YouTube acquisition leave Microsoft? The question is particularly interesting in light of reports that the Redmond company was one of those that talked with YouTube about a possible deal.
Asked about those reports today, Microsoft didn’t precisely confirm them, but didn’t directly deny them, either. In a statement, the company said it “evaluated acquiring this type of technology several months ago” but decided that building its own video-sharing service would be “a more cost-effective way to compete in this new space.”
In today’s Internet video news, the Microsoft Blinkx deal looks like it will shortly be put in the shade as Andrew Ross Sorkin’s NY Times DealBook Blog reports:
After marathon negotiations over the weekend, Google could announce a deal to buy YouTube.com, the popular video-sharing Web site, for about $1.6 billion as early as Monday afternoon, people involved in the talks said.
Barring a last-minute snag in the talks, the boards of both Google and YouTube were scheduled to hold separate board meetings on Monday to approve the deal, with an announcement possible after the close of regular trading. Discussions could still break down, however, or another party could present a more-attractive offer.
As for the persistent worries about YouTube and copyright violations, YouTube just made some new friends as Chris Williams reports at The Register:
YouTube moved toward full legitimacy today with a trio of deals with media giants.
Universal Music Group boss Doug Morriss had previously described YouTube as a “copyright infringer” which owed his firm tens of millions in royalties.
Now it seems he has acquiesced to the increasing distribution strength of YouTube, as have the big wigs over at Sony BMG.
The latter has properly gotten into bed with YouTube, with a carve-up of per-click advertising revenues on pages carrying its content. Universal has stopped shorter, inking a “strategic partnership” instead. YouTube will simply pay it for each music video or user-generated video that uses its music.
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Warner Music embraced YouTube in September. Three of the big four record companies are now on board, with EMI the lone dissenter, though a deal is inevitable. Smaller record labels have been posting music videos to YouTube for months.
The CBS television network signed up as well as described in the rest of the article. It’s great when a plan comes together. I’m sure that Morriss’ chest beating was mostly in pursuit of better terms since it surely did not escape his notice that Internet music videos are mostly advertising for his product.
Meanwhile, Google was covering all the bases with its own record label deals:
Google said Monday that it had signed agreements with both Sony BMG and Warner Music Group to stream each company’s catalog of music videos free from its Google Video service. The deal would also eventually allow the company’s AdSense partners to also stream the videos as well.
The Mountain View, Calif. based search company is working on technology that would allow Google Video users to incorporate Sony BMG and Warner content into their own content submitted to the service. Such capabilities would be provided for free.
The financial terms are discussed in the article, but that part about the AdSense partners is interesting. They’re the third party publishers carrying Google Web advertising and it sounds like Google is buying them a license.
