• by Wendy Davis , Staff Writer @wendyndavis, August 25, 2008

NBC is facing much Monday-morning quarterbacking today for its decision to limit Webcasts of the Olympics. That strategy left the network with only $5.75 million in online video ad revenue from the Olympics, according to eMarketer estimates. By contrast, CBS made an estimated $23 in online ad revenue from this year's March Madness, which the network made widely available on the Web.

Fearing that free streams would result in fewer people watching on TV, NBC excluded some of the most popular events from its Webcasts. While the network offered around 2,000 hours of live coverage online, that left out many events. In its attempt to control distribution, the network also didn't allow users to embed the clips on other sites. Further, it spent untold dollars in legal fees by policing other sites for clips and sending takedown notices.

Yet, the attempts to restrict the clips were ultimately futile, as footage surfaced on peer-to-peer sites. Consider, the International Olympic Committee complained that Pirate Bay accounted for more than 1 million downloads of the opening ceremony.

At the same time, there's no proof that NBC's ratings fell as a result of the availability of pirated clips. In fact, despite NBC's anxiety about diminishing its TV audience, there's no evidence that ratings ever fall when content goes online or that they rise when material disappears from the Web.

Case in point: the CW's "Gossip Girl." The show proved to be one of the few hits of the season in its first year because it was widely available on the Web. Only around 2.6 million people tuned in to watch it last fall on TV, but teens downloaded it from iTunes. Episodes were also available for free on the CW's Web site.

In April, the network thought it could boost TV ratings by removing the free streams from the Web. But the first episode to return after the writers' strike drew around 2.44 million viewers -- only 1% more than immediately before the strike. When the show returns for a second season next month, the CW will again offer ad-supported streams.

NBC's decision to restrict Web coverage of the Olympics stems from the same impulse as the CW's decision to remove Web streams of "Gossip Girl." It was a doomed attempt to retain control over content -- even at the expense of millions of dollars in ad revenue.