EXCLUSIVE: I’ve learned that Google has put Hollywood on notice to keep mum as it prepares to announce its big plan to redefine YouTube with 25 or so channels that will offer professionally produced news, information and entertainment. Google plans to spend an estimated $150M for the services — top tier channels would get about $5M apiece. I’m told that the search giant wants to unveil its initial slate of channels by the end of this month. They’d go live in January. YouTube is gearing up to announce additional channels in January that would be up around April. Partners expected in the the first round include Warner Bros., Shine Group, BermanBraun, FremantleMedia, and skate boarder Tony Hawk. But Google has insisted that partners sign non-disclosure agreements — and has warned that those identified publicly before things are official might be cut out of the announcement. There’s also lots of skittishness because Google will control the promotion and ad sales for many of the channels.
So what does this mean? Google hopes that the slick productions will open doors on Madison Avenue where many major advertisers still turn their backs on YouTube’s user-generated content. If the financial model works, then Google could launch countless channels to make it the destination of choice for people who want to explore passions or interests that are too specialized for mass media including broadcast and cable TV.
Google’s investment is huge in the nickel-and-dime world of Web video, even though it wouldn’t turn many people’s heads in movies or television. Google plans to recoup its investments from ad sales, and then split revenues with the content producers. But Google’s still engaged in several simultaneous negotiations as content providers look to strike different deals. For example, major studios and networks insisted on using their own ad teams — in part to avoid conflicts with their existing TV or Web advertisers. In another major concession, Google has agreed to let content providers retain ownership rights to their productions. Although Google’s still trying to keep details of the project under wraps, CEO Larry Page told analysts in an earnings call yesterday that YouTube is well positioned to help content creators “find the right users, and get paid both through advertising and directly. And so I think that’s just a logical place for us to be in, and a logical place where you’ll see a lot of activity in general.”
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