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February 8, 2007 10:40 AM PST
Murdoch the latest media mogul to take on YouTube
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Murdoch, chairman and CEO of News Corp., told attendees at McGraw-Hill's 2007 Media Summit here that while he finds YouTube "hypnotic," he questions whether the company can generate big advertising revenue.
"How do you monetize it," asked Murdoch, whose social-networking site MySpace offers its own video player. "If you interrupt the flow of videos with commercials, (YouTube viewers) are going to go with (MySpace) or somewhere else."
Murdoch pointed out that YouTube may be in the crosshairs of some big entertainment companies that have recently made "some hostile sounds" regarding the company. Viacom last week demanded that YouTube remove 100,000 video clips featuring Viacom-produced films and TV shows, such as The Colbert Report. Jeff Zucker, the new CEO of NBC Universal criticized Google and YouTube for not doing enough to prevent users from uploading clips that violate copyright law.
Google acquired YouTube last year for $1.65 billion. YouTube representatives could not be immediately reached for comment on this story.
The hostile sounds may be a sign that entertainment companies don't want to allow YouTube to become too strong, said Barry Diller, the InterActive Corp CEO, on Wednesday. At the Media Summit, Diller said that the film and TV studios don't want to surrender too much control to a single distribution partner. The music industry suffered this fate with Apple's iTunes.
"What's happening is media companies are not going to let YouTube get so strong in distribution where they'd be like (cable broadcaster) HBO once was," Diller said.
HBO once held a lock on the distribution of movies on cable television.
Murdoch also said in his speech that he doesn't think consumers are interested in watching full-length features on their cell phones or PCs. He said that MySpace is growing nearly 30 percent each quarter.
Much of the growth is being driven in Europe and other international markets. To meet the needs of the new users, News Corp. is preparing to spend as much as $70 million on hardware and servers.
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If it is ruled that YouTube should have to compensate copyright holders revenue made on their content before it is taken down, they may have a problem.
If it is ruled that YouTube is not liable to pay said compensation, any Joe out there with little worth suing for can build a website infringing others copyrights for financial gain.
I think there are people out there waiting in the wings for an answer to that before they decide how to react.