CBS/Yahoo deal not the win-win it seems

Most things Media 2.0 are counterintuitive to Media 1.0 companies, because the rules are different and, in many cases, the opposite of what they appear. This can create a huge blind spot for traditional media companies, who are often too busy managing the bottom line to see the gaping hole in front of them.

The 16 CBS owned-and-operated stations have struck a deal with Yahoo to provide local news videos to the portal in trade for splitting the revenue on national ads that Yahoo will serve. This is a pretty big deal and the first of its kind involving local stations and one of the big portals. A TV Week report on the partnership notes that both sides win: The stations get a revenue boost, while Yahoo gets fresh video that advertisers will find trustworthy.

“The future of our TV stations is severely threatened,” said Jonathan Leess, president and general manager of the CBS Television Stations Digital Media Group. “Media buyers and planners are shifting dollars from traditional media sources. We need to do the same.”

…Last month Yahoo served up 50 million videos across its sites from sources such as ABC News, CNN and Reuters, up from less than 4 million videos in September 2005, said Scott Moore, head of news and information for Yahoo Media Group.

“This is the first [deal] we have done for local,” he said. “We’re not finished yet. CBS is our anchor partner.” Yahoo is in active discussions with other station groups, he said.

…The CBS videos will play on Yahoo, but will include links back to the CBS station sites.

This is a precedent-setting deal and will likely spawn all kinds of others, but there’s a real danger here that I call the “on-demand trap.” While I agree that stations need to unbundle their content (hell, I’m the guy who first called it that), the reality is that this deal exposes these 16 markets to further encroachment by Yahoo (or any of the other portals) as THE local go-to media entity for those markets and assigns the CBS affiliates to a purely content-creation (read: expensive) role in the media value chain. So unless the CBS O&Os are also pursuing the creation of other local information sites, I don’t see this as anything other than a short-term win and a long-term loss.

What happens if Google does a deal with ABC stations, and AOL or MSN does a deal with NBC stations? Suddenly, the local affiliates are duking it out on somebody’s else’s turf while spending the same amount of money they did when the battle was on their own. Or let’s say that all network affiliate video news is available via the portals. Does anybody really think the value of these stations’ sites stays the same when their material is available on the portals? And so a video view is worth exactly half of what it was before this deal. How is that good for the stations?

Please don’t get me wrong. I feel just as strongly that stations need to unbundle their content and make it available everywhere. But it is actually a Media 1.0, multi-platform distribution play, and that cannot be our only strategy.

This is why I’m so adamant that the Media 2.0 battlefield for local media companies is in the world of aggregating local databases (“but that’s not what we do, Terry”). THAT is what’s new in media, and we’d better get into it soon, or we’re going to completely abdicate that role to the likes of Google, Yahoo, AOL and MSN. It’s all about money, people, and already more than half of local dollars spent for online advertising goes outside our markets. If we’re going to make an off-site play with our videos, wouldn’t it make more sense for those stations that do local news in a market to combine their resources on a local video portal rather than making deals with the devil? At least on a local portal, the stations would get 100% (or at least a much higher percentage) of the revenue for their video plays, and they wouldn’t turn all those local eyeballs over to these wolves in sheep’s clothing.

The TV Week report says that Yahoo will sell ads on a national basis, but that is just a necessary step on the road to local. And make no mistake, that is where the big portals really want to be.

(Thanks to Lost Remote for the tip)

Comments

  1. thedetroitchannel says:

    i agree with you…said so over on LR.

    the one thing i think local has going for it is, it’s LOCAL.

    i’ve used yahoo for over 10 years and hardly have i used it for local stuff.

    the thought of going to yahoo.com/detroit or yahoo.com/grossepointe just won’t work with me. maybe i’m in the minority here?

    networks and station groups simply handing it over to yahoo and google to figure out is hard to imagine.

  2. Randy Hoffman says:

    Local stations do not view Yahoo, Google, AOL, and MSN, ect. as competitors. You posed an interesting question sometime back. How many local television manages could tell you (or even estimate) how much local money is taken out of the market by Yahoo, Google, et al? The answer is very few, if any. Those same managers will know their "share" of the local television market. They will have very good estimates of the annual billing of competing television stations. So the idea of working with the station across town to create a local portal is anathema. But they will open the gates of the kingdom to their "partners" such as Yahoo and Google. Looks like the classic Trojan Horse strategy to me.

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