• Variety, Tuesday, March 13, 2007 10:45 AM

Does showbiz have Web fright? Hollywood, an industry that's used to shifting gears quickly, is stuck in a rut in the case of YouTube and online video. Once touted as a new medium "handy for branding" YouTube, post-Google that is, has become hands-off.

That curious decision (which inevitably comes from production co.'s big media parents), has left many industry pundits wondering, why they should turn their backs on free promotion? In the case of Viacom, once it demanded that its clips be removed, all of its clips were removed, including those for the VH1 show "Flavor of Love," which drove "millions of impressions" according to VH1 programming chief Michael Hirshorn. He considered it good marketing.

However, in Upstairs Hollywood, the words "viral video" still mean their content is getting ripped off, creating schisms between departments. On one side are those brave souls advocating viral video as an opportunity. On the otheris the old school complaining about "hundreds of millions, if not billions of dollars being digitally picked from their pockets." In other words, marketing guys love viral video; the legal guys hate it. The most classic example is NBC Universal, which operates a YouTube channel with more than 200 authorized clips--as its legal department sends more than a thousand cease-and-desist letters per month.

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