• Google To Pay CBS? Unlikely.

    CBS CEO Les Moonves said this week that Google TV is not going to get CBS programs for "zero dollars," suggesting that if the company were to unblock access for the device, it would only happen when Google is willing to pay. I've learned to never say never, but in this case I think the scenario where Google pays for CBS and other broadcast networks' programs similarly being blocked from Google TV is very unlikely.

    When Moonves says "I'm not sure what it is," (referring to Google TV) it makes me think he either doesn't understand the Internet, is being disingenuous, or both. As I originally argued a couple of months ago, in "Broadcast TV Networks Are Wrong to Block Google TV," the device is not hard to understand. It serves essentially the same purpose for content providers on TVs as the Google search engine does online and on mobile devices. A user wants to find a piece of content or an answer to a question or a product, he/she types a term into the search bar and a list of filtered results appears. Google has also enhanced Google TV's core search and discover functionality with a bunch of apps that help emulate the full Internet experience on TV; for now those are interesting, but not yet compelling or unique vs. other devices that do similar things. Over time they may be.

    As with Google the search engine, the benefits to providers of differentiated content are substantial. (Note the emphasis on "differentiated" - it is the lack of differentiation among news providers that has enabled Google to have the opposite affect on the newspaper business.) Google's magic is that it massively reduces the friction between content sought and content delivered, helping seamlessly drive huge audiences. Of course Google doesn't monetize the content brought up in the search results directly, it monetizes around the results, with adjacent, relevant ads.

    As it stands today, that appears to be the model for Google TV as well, which means Google is not trying to get into CBS's ad revenue business. Further, it is in no way a "distributor" looking to retail a service like Netflix or Hulu Plus. Rather, I see it as a "facilitator" just like in online. As long as that models holds, it's very unlikely that CBS - or anyone else - is going to extract payments from Google. If Google were to begin paying CBS, it would turn Google's business model completely upside down; instantly every content provider on the planet would have their hand out. Google would be redefining itself as a distributor, not a search engine.

    It's hard to imagine Moonves doesn't understand these distinctions, or the value that Google already provides to CBS programs available online by directing traffic their way. However, flush with success from recent retransmission consent negotiations, it may be that Moonves and other broadcast executives have decided that, logic aside, Google is just too much of a fat cat not to take a shot at. And it may not be a crazy idea. After all Moonves was whistling in the wind about retrans payments for broadcasters for years before it finally became a reality, proving him prescient in that case. Maybe he's onto something this time too, though I think it's unlikely. More realistically, Google and the broadcast networks look like they're in a standoff. Meanwhile the rest of the online video market continues to move on.

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