YouTube announced earlier this week that it is launching a subscription service known as YouTube Red that it hopes will make the lives of content companies better by increasing the revenue they generate, but at least one large media entity isn’t going to be on board for the ride. ESPN’s video channels on YouTube have all gone dark and its clips are all being removed, as a result of what a YouTube spokesman called “rights and legal issues.” At least for now, it seems, ESPN and YouTube have decided to go their separate ways.
The reason for that has to do with the way that YouTube Red works. For Google (GOOG), there’s a lot riding on the launch of the new service, which provides access to all of YouTube’s content without advertising, as well as other features like offline viewing, for $9.99 a month. So in order to make the offer as appealing as possible, the company has been trying for what it calls “content parity,” meaning whatever is available on the free site with advertising needs to also be available on YouTube Red without advertising.
If you’re a partner like ESPN (GOOG), what that means in practice is that if you either aren’t prepared or aren’t able to offer your content for viewing through YouTube Red, then it becomes unavailable through the regular YouTube site as well (although only to viewers in the U.S., since that’s where YouTube Red is being offered first).
There’s been a lot of grumbling from media companies about how this amounts to a form of extortion or strong-arming by Google, with their content held hostage unless they agree to this new deal. From Google’s perspective, however, it is trying to help companies like ESPN monetize their content better than they could through the ad-supported model—and in order for the service to work, everyone needs to be on the same page.
ESPN’s parent company, Walt Disney Co., has already agreed to Google’s new terms for YouTube Red (as have the media companies and other partners who provide 99% of YouTube’s content, according to the company). A spokesman from ESPN wasn’t able to comment on the specifics, but the problem could be a conflict between YouTube Red and the rights that the sports network holds to game-related content.
To take just one example, in some cases ESPN may have the right to broadcast a game, but not the right to make a recorded version for offline viewing—which happens to be one of the features that YouTube Red offers. Or it may not have the right to offer a specific broadcast as part of a subscription package delivered by a third party. That wasn’t a problem when YouTube was just free, ad-supported videos, but it is now.
Sports content is among the hardest to co-ordinate from a licensing point of view because there are so many different competing agendas, whether it’s the leagues or the players’ association or some other agency, all of whom are interested in the massive licensing revenues that sports content generates.
Whether ESPN will ever be part of YouTube Red is unknown. All a spokesman for the network would say is that the channel “is not currently part of the Red service,” and that “content previously available on the free YouTube service will be available across ESPN digital properties.”