Here’s a marriage of convenience: A pact between Netflix and Warner Bros. that gives both sides some of what they want, at least for now.
Netflix (NFLX) has agreed not to rent the Time Warner (TWX) studio’s movies for the first 28 days after they go on sale. In return, it will pay the studio a reduced fee when it does rent the discs, and will get more movies to offer via its growing Web streaming service.
Hard to get a very good sense of the deal because no dollar signs have surfaced so far. But the broad strokes sound good for both sides: Warner gets a big distributor to help it protect its retail sales for a bit longer, and Netflix gets to reallocate the money it spends from discs to digital.
Here’s Ted Sarandos, Netflix’s Hollywood emissary, via Reuters:
Sarandos declined to comment specifically on the economics of the deal but said it represents meaningful savings in terms of what it spent on Warner’s physical discs in 2009. He said, however, Netflix was reinvesting those savings in streaming.
“On a net basis in 2010, we’re growing our spending on the studios even if we are saving on physical DVDs,” he said, adding he expects this trend to continue as more and more customers seek movies through its streaming service.
“In 2010, Netflix will spend $600 million on postage,” said Sarandos who envisions “moving that entire bucket of spending to Hollywood and out of the post office.”
Note that this is exactly the agreement that Warner and other studios have not been able to strike with Redbox, the upstart rental outfit, which has led to a legal fight.
And it helps Netflix answer a question I hear more and more often these days: When will it be able to expand its selection of digital movies, which right now remains just a fraction of its physical catalog?
I’ll be able to ask CEO Reed Hastings that question myself on Friday during an interview at the Venetian Hotel in Las Vegas, where the All Things Digital team is gathering for the annual Consumer Electronics Show. You can listen in to what Hastings has to say at CES via a Web-streaming offering of our own Friday afternoon. Some details here, and more to come.
That’s the idea behind a brace of new sales guys, brought in by sales head Greg Coleman, who is himself a newish addition to the site.
- Andy Wiedlin, formerly at News Corp.’s (NWS) MySpace, and Yahoo before that, will run West Coast sales.
- Phil Cara, formerly at AOL, and Yahoo before that, will run East Coast sales.
- Peter Cherukuri, the former publisher of Roll Call, will run sales in Washington, D.C.
- Brian Kaminsky, formerly at Reuters, and Yahoo prior to that, will run sales operations out of New York.
Note the connection for three of the four new guys? Not a coincidence.
Coleman was the longtime Yahoo (YHOO) sales head until he got pushed out in 2007. He resurfaced last year as head of AOL’s (AOL) sales group but left less than three months into the job when new CEO Tim Armstrong brought in his guy.
At the new gig, Coleman’s plan is to use his new/old team to convince advertisers to start spending significant money. The site was on track to do something in the $10 million range last year, but CEO Eric Hippeau wants to goose that number to $100 million in the next few years in order to justify the $37 million that investors have sunk into the company.
Coleman came to the site last fall when it already had a good traffic story to tell–comScore (SCOR) counted 6.8 million unique users in September, which is more than WSJ.com’s 6.7 million. And that story will get better very soon, as comScore rolls out its new “hybrid” measuring system. Coleman says the new numbers will push Huffpo above the 17 million mark.
His team still needs to battle the perception that Huffpo is an all-politics (and lefty, to boot) site, since advertisers are often leery about anything political.
Sure enough, as I’m typing this Monday night, the site’s front page is dominated by Washington coverage–a banner headline about the Republican Party’s opposition to something called the Consumer Financial Protection Agency. And no matter what Coleman and his guys say, no one’s going to confuse the site with, say, Fox News.
Still, the site has long argued that it isn’t dominated by political coverage, and Coleman now says less than 25 percent of its traffic comes from that stuff. A heavy dose of entertainment/media coverage–did you know the dude from “300″ now has man boobs and a paunch?–helps make that claim plausible.
Will advertisers buy it? People who aren’t Greg Coleman tell me marketers were already warming to the site this year, a result of work done by the previous regime. And in large part due to interest from entertainment companies pushing new movies and TV shows.
But if Coleman and his employers want to hit their $100 million goal, they’ll need to do a lot more work. For more on Coleman’s strategy, check out his conversation with Kara Swisher from last fall.
Yup, Viacom and Google are still locked in a high-stakes court battle over YouTube, copyright law and money.
It’s hard to remember this conflict sometimes because it started all the way back in the spring of 2007, after Google offered $500 million to appease Sumner Redstone and company, then thought better of it. Viacom countered with a billion-dollar lawsuit claim, which has been dragging its way ever so slowly through the legal system since then.
The latest reminder: A report from CNET pointing out that Google (GOOG) has deposed Viacom (VIA) employees Jon Stewart and Stephen Colbert, but that “South Park” creators Matt Stone and Trey Parker have yet to hand over documents the search giant’s lawyers have requested.
“The missed deadline isn’t amusing to Google,” Greg Sandoval relays.
This is theoretically important because both sides are trying to prove that their opponents’ employees knowingly uploaded copyrighted clips to the site.
If Viacom can prove that Chad Hurley and company were doing it, it bolsters its claim that YouTube knew it was violating copyright law and didn’t do anything about it. If Google can prove that “The Daily Show” or “South Park” dudes were doing it, it can argue that it’s impossible to tell when it was okay to run Viacom clips and when it was verboten.
Alas, in a slow-motion case like this, it’s impossible to imbue any particular move with particular weight. For instance: Google’s interest in deposing Stewart et al dates all the way back to August 2007. So the fact that the company’s lawyers have talked to him recently means that…it has talked to him recently.
Still, it does give us a chance to play the classic “South Park” YouTube tribute clip–legally, I should add.