Monday, February 12, 2007

Classic TV -- Coming Soon on Google's YouTube Via Digital Music Group

In a pact watched by many for several reasons, Google and Sacramento-based Digital Music Group Inc. (NASDAQ: DMGI) announced today that they have signed an agreement pursuant to which YouTube will distribute more than 4,000 hours of DMGI's video content -- including classic TV shows such as "I Spy", "Gumby" and "My Favorite Martian." Today's The Wall Street Journal discusses this important deal in a major story featured in the "What's News" column on its front page.

For the sake of full disclosure, I sit on the Board of DMGI and am part of the company's content acquisition committee -- and, I am a strong believer in the growing importance of content aggregators in the burgeoning digital media age. Although DMGI initially focused on acquiring digital music rights, the company has now expanded deeply into the acquisition of video content as well (as exemplified by the Google/YouTube deal).

The Google/DMGI pact is important for several reasons:

(1) much, but certainly not all, of the DMGI video programming distributed by Google's YouTube will be full-length commercial television (and not merely short video clips, which are the customary current fare on YouTube) -- this in itself makes this deal a "big deal" and a sign of things to come;

(2) YouTube will monetize this content via advertising by inserting ads on the "watch" pages associated with the DMGI content (YouTube typically has not inserted ads on the "watch" pages of short clips played on its site);

(3) the companies' pact is far-ranging, including DMGI music and other video content in addition to its classic TV video programming (and YouTube will use its filtering technology to identify such content when used by its customer base and will compensate DMGI accordingly); and

(4) this deal will be closely watched by other major content providers -- as well as the distributors of digital media -- who are looking for ways to be compensated for their content in this brave new digital marketplace (I recently blogged about Viacom's shot across the bow to YouTube, and today's Los Angeles Times features a story about how News Corp's MySpace today will announce video filtering technology that is designed to automatically remove copyrighted material from its site).

Obviously, all parties benefit -- as they should -- under the Google/DMGI pact. And, the licensed online distribution of video is only in its very early innings and undoubtedly will grow exponentially in the years ahead. Such growth -- which of course first happened on the digital music side -- should handsomely benefit content owners and aggregators over time (including those who license "deep" classic catalog, which will find new life by consumers in this brave new world that is not bound by traditional time slots, programming guides and retail shelf space and which instead can be easily found via discovery and recommendation tools).