• by Gavin O'Malley  @mp_gavin, March 14, 2007

Since the rise of YouTube, television networks have wavered over whether to embrace or eschew the potent media channel. Concerns over inadequate compensation--or no compensation at all--have been weighed against the exposure that YouTube can provide a show at little or no cost to networks.

The relationship between Viacom and Google, which acquired YouTube for more than $1.7 billion last year, went from bad to worse as Viacom slapped Google with a billion-dollar lawsuit claiming "massive intentional copyright infringement."

This comes about a month after Viacom, whose channels include MTV, Nickelodeon and Comedy Central, accused Google of copyright infringement and demanded that YouTube remove some 100,000 clips of Viacom programming.

Also last month, Google failed to close a multi-year deal with CBS Corp., which would have given YouTube's users access to clips from shows like "The Late Show with David Letterman" and "CSI." The two companies reportedly failed to agree on the deal's time frame, among other issues.

As late as January, a deal with CBS seemed hopeful as its clips cluttered YouTube's most-viewed pages. Last October, CBS struck an agreement to make some CBS video available on YouTube, in exchange for a share of ad revenue. The two companies even partnered on a Super Bowl promotion asking consumers to post 15-second inspirational messages on YouTube, which CBS planned to later broadcast. Smaller deals of this nature, however, are still being considered.

Google's troubled relationship with TV networks dates back at least to 2005, when it began recording TV programming, in some instances without the permission of networks. Executives at CBS, ABC and Warner Bros. television, among other networks, asked Google to cease and desist, which Google did.

Despite unauthorized posting of copyrighted material by YouTube users, Google has been trying in earnest to strike deals with TV companies to carry their videos on YouTube legally. The video site has willingly complied with the demands of media companies to remove copyrighted video.

"It's unfortunate," Eileen Naughton, Google's New York regional sales director, said of the failed deals. But, she added, the YouTube business is "all too speculative and new at this point," to cast blame.

Google--and YouTube before it came under Google's rainbow umbrella--have proven their ability to close big media deals in the past. Last summer, Google reached a deal--since expired--with Viacom's MTV Networks to distribute video over the Web. It reached agreements with Warner Music Group, among other music companies, to license music videos. Also last year, Google guaranteed the payment of at least $900 million to News Corp. to provide MySpace with search technology and to broker ad sales deals.

"We have hundreds and hundreds and hundreds of thousands of partners," Naughton emphasized. "We are a great partner."

In addition, last June, NBC agreed to put promotional clips on YouTube and buy ads on the site. But by February of this year, the peacock's lawyers had sent Google a six-page letter demanding that it keep unauthorized content off the site.

In light of these recent successes and failures, Google makes no bones about the fact that YouTube's business model is a work in progress.

Asked to grade the maturity of YouTube's business model on a scale from one to ten, Naughton said: "It's not even at one yet. The ad effect has not even begun to be felt. There is no well-built-out model for YouTube right now."