CBS backing away from Innertube

From today's Wall Street Journal:

Can CBS Put the Net Into Network?
Broadcaster Launches Plan
Syndicating Shows on Web,
Admits Old Strategy Failed
By BROOKS BARNES

A year ago, CBS Corp. announced the creation of Innertube, an entertainment channel on CBS.com designed to make the company a player in online video. It streams video of sporting events, news reports and reruns of shows such as the hit comedy "How I Met Your Mother."

CBS's new chief Internet strategist now jokes that the Web address for Innertube should be "CBS.com/nobodycomeshere."

A version of what the hit CBS show 'CSI' would look like on a variety of Internet video players. Clockwise from top: Joost, AOL, TV.com and Bebo.
CBS, after a year of experimenting with various Web initiatives, says that forcing consumers to come to one site -- its own -- to view video hasn't worked. Instead, the company plans to pursue a drastically revised strategy that involves syndicating its entertainment, news and sports video to as much of the Web as possible. It represents a stark departure for the TV industry. Most of CBS's major competitors, including Walt Disney Co.'s ABC, General Electric Co.'s NBC Universal and News Corp.'s Fox, are to some degree all betting that they can build their own Internet video portals.

Starting this week, an expanded menu of CBS's video content will be available for free to consumers on as many as 10 different Web sites ranging from Time Warner Inc.'s AOL to Joost Inc., a buzzy online video service that is just rolling out. The company calls its new venture the CBS Interactive Audience Network.

Because CBS plans to sell the advertising that will appear on the digital network, the launch is timed to coincide with the industry's high-stakes "upfront" ad-selling season, which kicks off today. It is the time of the year when the big networks unveil their fall schedules to advertisers and start negotiations to place some $9 billion in ads for the 2007-2008 television season, which starts in September.

CBS Chief Executive Leslie Moonves plans in coming days to announce a flurry of other deals aimed at giving consumers new ways to use CBS content online. For instance, CBS is working on agreements with social-networking sites such as Facebook Inc. and Last.fm Ltd. to allow users to post CBS video clips to their profiles, according to people familiar with the matter. A deal is also imminent with Slide Inc., which allows users of social networks such as MySpace to personalize photos and video for their pages.

All the big networks will aggressively shop advertising space on their sites to media buyers this week, but most of the networks are pursuing a homegrown approach to Internet video. ABC, for instance, has focused on streaming all of its prime-time programming through its own ABC.com player. NBC Universal and Fox in March said they are creating a new Internet video portal to compete with Google Inc.'s popular video-sharing site YouTube. In addition to launching the new portal -- which the two companies plan to support with a $100 million marketing campaign -- the venture will syndicate the content to big Web sites. Those sites include AOL, Microsoft Corp.'s MSN, TV.com, News Corp.'s MySpace and Yahoo Inc.

In contrast, CBS has abandoned attempts to build its own blockbuster portal and is instead signing pacts with a raft of smaller -- and often-untested -- Web companies, from Joost to Veoh Networks Inc., a video-sharing service. Unlike other big media companies, CBS's holdings in cable networks are limited, which gives it more freedom to distribute its content widely over the Internet without hurting a cable revenue stream. CBS is essentially placing bets on which video sites will matter in the coming months and years, both in the U.S. and around the world. With any luck, the smaller sites will grow in popularity, boosting the exposure of CBS shows -- and lifting the network's haul of online ad dollars. CBS will give advertisers the freedom to tweak their ads to fit the different sites. The internal code name for CBS's new strategy: "Rolling Thunder."

"We can't expect consumers to come to us," says Quincy Smith, the president of CBS Interactive. "It's arrogant for any media company to assume that."

CBS faces a particularly difficult challenge luring its viewers to the Web. The network, home to franchises such as "CSI: Crime Scene Investigation" and "60 Minutes," attracts an older average viewer than ABC, NBC or Fox. As a result, media buyers and analysts say, CBS's audience is less Web-savvy and the company has a harder time funneling viewers to its Web site with on-air promos.

The likes of Yahoo and MSN see the networks as trying to leverage their relationships with TV ad buyers to siphon off online ad dollars. So while the Web companies want to offer their users access to portions of studio movies and TV hits -- which explains why they are signing deals with all the networks -- they argue that they should be selling the advertising that accompanies it. The company that sells the ads gets to keep the lion's share of the revenue; in CBS's case, it gets 90%, while the Web partners get a 10% cut.

Joanne Bradford, chief media officer of MSN, says advertisers would be served better by buying online ads directly from Web sites rather than buying Internet packages offered alongside their upfront TV deals with the networks. "I'm a little irritated that the networks have put together a digital package that lets a marketer check a box and isn't as robust or deep," she said at a conference last week for advertisers in Seattle.

Advertisers will ultimately decide if CBS's new strategy is the right one. So far, media buyers are positive about the move, although they note that CBS has had troubles implementing some heavily promoted digital efforts in the past. CBS has already signed up major advertisers for its digital network such as Procter & Gamble Co., General Motors Co. and AT&T Corp.'s Cingular Wireless.

"I'm really impressed, especially regarding the ability for us to make one buy but tailor the ad message differently to each of the sites," says Tracey Scheppach, corporate vice president and video-innovations director at Publicis Groupe's Starcom USA.

My comment:
What does this mean for InTurn? And will any of the CBS soaps get a re-airing on another outlet finally (other than Y&R)?