CBS, Record Labels Strike Deals With YouTube

In the latest sign of shifts in how established media companies view free online video sharing, YouTube Monday announced content distribution deals with two record labels and a major U.S. TV network.

CBS said it would use YouTube to distribute short clips of its shows and those from its premium cable channel Showtime Networks, as well as its basic cable sports broadcasting service CSTV Networks, making a range of news, sports and entertainment content available. The two companies will share advertising revenue.

Google Deal on the Horizon

Starting later this month, CBS will also become the first TV network to use YouTube's new system for identifying and reporting the use of copyrighted content. CBS will have the ability to remove content from YouTube if it deems it to be a violation of its copyright. CBS' content will be available in a branded channel on the site.

Separately, YouTube announced plans to distribute music videos for two records labels, Sony (NYSE: SNE) BMG -- a joint venture between Bertelsmann and Sony -- and Universal Music Group, which is owned by Vivendi.

Universal said it would make videos from its artists available to share online, with the record label and its artists sharing in advertising revenue. Sony will also make videos available on the sharing site and will allow YouTube users to use some songs in its catalog to create their own videos.

The partnerships come as rumors swirl that YouTube is on the verge of being acquired by Google (Nasdaq: GOOG) for as much as US$1.6 billion. The 19-month-old company has quickly become the most heavily visited video site on the Web, serving up tens of millions of video clips -- from homemade videos to news and sports clips -- every day.

Avoiding the Courtroom

As important as the deals are to YouTube's ability to generate revenue, the partnerships may be just as critical at helping the company stay out of the courtroom. Already, at least one record label executive has suggested that the homemade music videos on the site represent copyright violations because they are often set to popular music.

For its part, CBS said YouTube's ability to offer technology to track its content helped make it comfortable about putting its content onto the site. When it is notified that its content is appearing on YouTube, CBS can either choose to have it removed or allow it to remain and share in the advertising revenue it generates, the companies said.

"We're pleased to be the first network to strike a major content deal with what is clearly one of the fastest growing new media platforms out there," said CBS President Les Moonves. "This strategic partnership is a unique development in CBS' continuing initiative to monetize our industry-leading content across new distribution platforms. We're now able to offer select entertainment, news and sports programming to a new significant audience, get paid for it, and learn a few things along the way."

CBS-provided ontent will include a range of video clips from college sporting events, as well as short clips from "Survivor," "CSI," and "The Late Show with David Letterman." News clips will include video snippets from "CBS Evening News with Katie Couric" and "60 Minutes," while clips from Showtime dramas such as "Sleeper Cell" and "The L Word" will also be made available.

Free Is Good -- to a Point

YouTube has struck deals with music labels before, announcing last month that it would distribute Warner Bros. videos and share advertising revenue with the label when user-generated content relied on its songs or other intellectual property.

The latest YouTube deals came on the same day that Google announced similar partnerships for its Google Video channel and amid rampant speculation that Google could announce as early as Monday that it was buying YouTube for $1.6 billion.

Both sets of content-distribution deals appear to come with the understanding that the sites will work to eliminate unauthorized video usage, JupiterResearch analyst Mark Mulligan noted.

"This is all a further step towards the legitimization of free content models as a key strategy for music labels engaging with younger audiences and generating revenue online," he said.

The future of online video is one of both abundant free content and plenty of content locked up behind paid-access firewalls, Mulligan added. "Premium paid digital services still have a crucial role to play."