The short version is that unlike its broadcast peers, CBS (CBS) has been reluctant to make many of its shows available on the Web because it worries that doing so cuts into its core TV business.

So while GE’s (GE) NBC Universal and News Corp.’s (NWS) Fox put Hulu together, CBS stayed away. And when Disney (DIS) decided to join the joint venture earlier this year, CBS executives argued strenuously against the deal. Instead, CBS has been content to use the Web as a promotional tool for TV via outlets like Google’s (GOOG) YouTube.

The longer version is below, via the transcript of a brief chat I had with Smith this afternoon to discuss his plans and the network’s. This is stuff he’s talked about before–to reporters, in industry forums, and even via emails he wishes he hadn’t written–but I’m running it at length here.

Because 1) I think Smith does a good job of explaining the push-and-pull of Web viewership vs. Web economics that everyone in big media is grappling with, and 2) I want people to see just how difficult it is to keep up when Smith talks. He can get out a lot of words in a relatively short time.

I also had a quick chat with CBS CEO Les Moonves, who made many of the points Smith did, but with less verbiage: I’ll get you that transcript shortly, too.

Peter Kafka: Since you’re going to be advising CBS’s Web video strategy, why don’t you lay out, for the record, where things stand?

Quincy Smith:

We recognize that the Web is two things. It’s both a new medium…and there my example has always been, look at fantasy football: When you’re nice enough to watch the Jets just pound the snot out of the Raiders on Sunday, on a CBS channel…on fantasy football on CBSSports.com, you start on the Tuesday before and end the Wednesday after.

And what are you doing? You’re personalizing it, you’re becoming more of a fan of the game [Smith goes on to praise CBSSports.com's feature set]. All of those things are additive, so when Sunday comes in, you’re actually more of a fan, and you’ve even more convinced you’re going to watch that broadcast show.

Now, I realize that sports is reasonably bulletproof, and a good case study to begin with versus some of the other programming, but the fact is, the Web is a new medium. So what do I also mean? Tech reviews on CNET, Money Watch being watched on BNET. GameSpot videogame reviews.

Access to content that CBS didn’t already have, that are additive–both in their own right online, with the margins that the CNET business is used to, and where we’re getting just stronger and stronger from a margin perspective–and potential content that can also be applied to our [local TV stations owned by CBS], our affiliates, our broadcast news, as well as the radio. So that’s the side of our business that is $600 million revenue and $50 million-plus profit on the bottom line.

The other side of the Web, the side that is most thought of by many journalists, is the threat of an IP-deliverer of video. And how you turn that threat into an opportunity.

And so, from that perspective, as  you know, we didn’t go ahead and say, “Okay, we’re going to lock down and stream, with all of our other peers in broadcast, and come up with the same rules, and embed and right-click this and go away.” I’ve never had a beef with Hulu. Hulu’s always worked as a great service. That’s part of the problem.

As a network, we need to make sure that our content is being seen where the dollars matter. And right now that’s on air. Opportunities like TV Everywhere–we’re not putting all of our eggs in that basket, though we are big advocates of it–are ones where you can actually take and expand and extend the television market online, so it doesn’t matter what screen you watch “CSI” on; what matters is that you watched it, it counts and you saw the ads.

But until that happens, it’s crazy to just stream the shows for zero economics. When in fact you can make a lot more money doing things that are additive and complementary to the rest of the CBS line. That’s where CBS interactive comes in now.

Kafka: But TV viewers are showing an increasing interest in watching their programs on the Web, whether from legal services like the Web or illegal torrents and pirate sites. Don’t you need to reach them where they are?

Smith:

Now, if you really look at those numbers, what they’ll say is [online and offline video are] both growing, right? We’re having the best year ever as America’s largest broadcast network, and I think that 99.9 percent of that–this is the quote I’ve never been able to get in there–is that’s [because] of the great content that we have. There’s some infinitesimal basis point that’s relevant [to CBS ratings because] we are making sure that when people watch it, they’re more inclined to watch it on television. For now.

Once that solution moves, once those economics move–whether that’s more ads, [higher] CPMs, more ad buyers….You and I can say all day long, “We’re sold out on Web video. That’s going really well. It’s sold out.” Well, no kidding, it’s sold out. It’s a $700 million market. The television market is $120 billion. And of that, $700 million, half of those [ad buyers] are spending  90 percent of their time doing Google keywords, not buying online video.

The key is, how do you turn television buyers into video buyers? And that’s where a solution like TV Everywhere comes into play.

And by the way, looking at [Hulu CEO Jason] Kilar’s comments the other day, in Colorado [at an industry convention], he sees that too. He’s more sophisticated on this stuff than most anybody. From the perspective of, he understands that’s where the big dollars are. And so he probably went at it as, “I’m going to aggregate all the people first, so hopefully things like TV everywhere come to us.” From our perspective at CBS, we’ve got to go to them.

I don’t hate Hulu. Hulu’s world-class video viewing. What I don’t understand is, why license all that content to something that works that well, that seamlessly, yet–without the economic model around it?

Maybe, says CNET’s Greg Sandoval. He reports that Viacom’s attorneys have unearthed emails that indicate that YouTube employees uploaded copyrighted material to the site and that “managers” knew there was copyrighted stuff on the site but didn’t do anything about it.

Those allegations happen to be key parts of Viacom’s (VIA) suit against Google (GOOG) and YouTube, and a good part of what the company has been looking for in the discovery/deposition process that has stretched on for more than a year and is slated to extend through the end of 2009.

Viacom has argued that senior YouTube employees, including cofounders Chad Hurley and Steve Chen, knew full well that their site was full of copyrighted material and not only didn’t try to prevent it, but at some point even encouraged it.

So what exactly do the emails say? I don’t know. Sandoval is summarizing the documents, not reproducing them. And if I’m reading his story correctly, he may not have seen them either, but may be relying on someone else’s description of them. (That said, in a separate story, Sandoval does reproduce parts of Google CEO Eric Schmidt’s deposition from the same case.)

Here’s his description:

Lawyers working on a $1 billion copyright lawsuit filed by Viacom against Google’s YouTube may have uncovered evidence that employees of the video site were among those who uploaded unauthorized content to YouTube.

In addition, internal YouTube e-mails indicate that YouTube managers knew and discussed the existence of unauthorized content on the site with employees but chose not to remove the material, three sources with knowledge of the case told CNET.

The e-mails, according to the sources who asked for anonymity because of the ongoing litigation, surfaced during an exchange of information between the two sides of the legal dispute.

I’ve asked Sandoval for more information about the emails he’s referring to, but I don’t expect him to say much; anyone who released documents from discovery would be violating a court order. Viacom had no comment. Here’s YouTube’s comment, via CNET: “The characterizations of the supposed evidence, made in violation of a court order, are wrong, misleading, or lack important context and notably come on the heels of a series of significant setbacks for the plaintiffs. The evidence will show that we go above and beyond our legal obligations to protect the rights of content owners.”

Now it’s easier than ever to alter an image. But it’s harder to get away with it.

Ask Microsoft, which just got caught digitally erasing a black man from a promotional photo and replacing him with a white guy. The original photo ran on a U.S. version of a Microsoft promotional site; the (clumsily) retouched version ended up on a Polish version.

CNET has before and after screenshots (click to enlarge):

U.S. Version

Polish Version

Microsoft (MSFT) has since replaced the Polish photo with the original, and apologized last night.

[Image credit: CNET]

Since announcing its plans in June, Swedish software company/Internet cafe outfit Global Gaming Factory X has seen a succession of allies jump ship.

Last month, the company worked with file-sharing veteran Wayne Rosso for three weeks before Rosso left, claiming the company had credibility problems and hadn’t paid his bills. Now, CNET reports that Peerialism, a technology company that was “integral” to Global Gaming’s plans, is having second thoughts–in part because it hasn’t seen any money, either. Greg Sandoval:

When it was announced in June that Global Gaming Factory X, would acquire The Pirate Bay for about $8 million, the Swedish software company said it would also pay about $13.5 million to obtain Peerialism….

But [Peerialism CEO Johan] Ljungberg told CNET News on Thursday that at the very least Pandeya will not make some of his deadlines for opening a restructured Pirate Bay, the world’s best known file-sharing site. That’s because much of the preparation has yet to be started.

More than two months ago, Pandeya hired Peerialism to begin doing some of the production work. Pandeya agreed to pay half the money upfront and the other half when the job was completed.

“That was two months ago but he hasn’t paid anything,” Ljungberg said. “We have his signature on the contract, but he hasn’t paid and we haven’t done the work…We’re not quite comfortable with the situation. We had really high hopes and ambitions for our technology but I’m not sure if this is the right home for it.”

I wanted to get Global Gaming’s response to the CNET story, so last night I pinged CTO Johan Sellstrom, whom I had corresponded with in early July. At the time, Sellstrom described his company’s plans as “the last chance for the media industry to come up with a new solution before everything goes to the dark side.” But Sellstrom now says that he left Global Gaming on July 15; he hasn’t explained why he left.

UPDATE: Swedish stock market regulators have suspended trading in Global Gaming’s stock today; the same thing happened a week before the company announced its Pirate Bay plans.

UPDATE 2: This might explain Sellstrom’s departure: A Swedish newspaper report says Sellstrom claims that his former employer owes him $840,000.

I’ve already gone on record: I don’t think Global Gaming’s plan has any chance of working, even in the best of circumstances.

But I’m always happy to hear what the company itself thinks. I’ve asked Global Gaming CEO Hans Pandeya for comment, but haven’t heard back. In the meantime, you can read translated accounts of a recent press release assuring investors that everything is hunky-dory, and that the company will own Pirate Bay by the end of the month.

If you liked the “Mr. Creosote” sketch in “Monty Python’s Meaning of Life,” you’ll like this one. And if you didn’t…well, you’re like many other folks, some of whom complained loudly enough to get Microsoft (MSFT) to yank the ad, though it still lives in Google’s (GOOG) YouTube.

Microsoft’s explanation for the spot, and its removal, via an email to CNET:

We make a point of listening to our customers. We created the … video as a tongue-in-cheek look at the InPrivate Browsing feature of Internet Explorer 8, using the same irreverent humor that our customers told us they liked about other components of the Internet Explorer 8 marketing campaign. While much of the feedback to this particular piece of creative was positive, some of our customers found it offensive, so we have removed it.

A reminder: These spots are not the work of Crispin Porter + Bogusky, the high-profile ad shop that gets associated with most of Microsoft’s marketing work these days. They’re from Indiana-based Bradley and Montgomery and they’re directed by Bobcat Goldthwait, for whom I’ve already professed my admiration.

These were Goldthwait’s first commercials, though, and it will be interesting to see if he gets another shot. And in retrospect, he did hint that this might be coming when he talked to Techflash after the first of his browser ads hit the Web last month:

Well, the folks at (Bradley and Montgomery), the agency that wrote ‘em, I would have to credit them with my involvement, and also Microsoft. I think they were trying to do something that was a little less mainstream, and I think that’s (what led to) my involvement. Normally the corporate world is very frightened of hiring the dude from Police Academy to direct their stuff, so I’m flattered and I was really happy. There’s a couple more coming up, too, so I’m actually looking forward to those being released, because I think they’re a little more nutty in tone.

Want to see for yourself? Have at it. But don’t complain to us afterward.

The site is the work of Peter Rojas, who helped build Gizmodo and Engadget, and Ryan Block, who took the torch from Rojas after he moved on. Gizmodo and Engadget are the best known and most powerful of the new generation of gadget sites, which makes Rojas and Block revered by the gadget gang. That’s why we’ve been hearing about gdgt, in dribs and drabs, for many many months.

But as well known as Rojas and Block are, they’re still going to have to work hard to make a dent in the crowded field. In addition to the two blogs they created, the gadget spectrum includes everyone from staid players like CBS’s (CBS) CNET to rumor sites for Apple (APPL) obsessives, like MacRumors, to sites for real obsessives, like the handful of people who still own Palm (PALM) Treos. (And, of course, there’s All Things Digital’s Walt Mossberg, who bestrides all of this like the colossus he is, and is also my boss. Hi, Walt!)

Rojas and Block argue that their site is different because it’s not going to be driven by editors but by the site’s users, who will gather there to swap info, stories, rumors, opinions, etc. In other words, Facebook for gadgets, though I gather they’d recoil if they heard that. The other pitch, though they won’t spell this out, either: Their site takes a bunch of features and content that you can find other places and presents them in a better way.

There’s a bunch of nifty features, like a gadget-finder that lets you find products via specs instead of brands, and the site seems to be pretty slick. But it’s better if you have a look yourself instead of having me describe it. And gdgt.com won’t really hit its stride until actual users start using it. I look forward to hearing what they have to say about my upcoming phone dilemma: iPhone 3GS, Palm Pre or Blackberry Tour?

But as much as Rojas and Block argue that this is a community site, it’s their names and reps that have people interested in the project. And that’s what has convinced investors to plow money into an ad-supported Web site in an era when the economy sucks and there are way too many ad-supported Web sites.

The duo won’t discuss funding, but I’m told that last fall they were discussing investments of up to $1 million, but ended up taking less than that via a group of VCs and angel investors. I don’t have a complete list of investors, but people familiar with the company tell me that early-stage investor True Ventures led the round, which also included New York-based incubator Betaworks and Mahalo’s Jason Calacanis.

Calacanis’s name will resonate with longtime followers of the tech blog world: He was one of the founders of Weblogs Inc., which created Engadget as a rival to Gawker Media’s Gizmodo, and hired Rojas away from Gizmodo. Calacanis eventually sold Weblogs Inc. to Time Warner’s (TWX) AOL for a decent pile of cash, some of which I believe ended up in Rojas’s lap.

Click the image below to see a screenshot of what gdgt’s homepage ought to look like.

Microsoft is willing to burn lots of cash as it stubbornly pursues its Internet strategy–it lost a staggering $575 million on its online business in the last quarter alone–but even Redmond has its limits. The company is finally confessing that Soapbox, the would-be YouTube it launched in 2006, is no YouTube. And it doesn’t sound that enthusiastic about keeping it going.

Microsoft (MSFT) Vice President Erik Jorgensen tells CNET that it is already going to scale back the site’s ambitions: Rather than let users upload whatever video they want, Soapbox is limiting user-gen uploads to specific categories it thinks it might be able to sell ads against–entertainment, finance, etc.

And the company is not even promising to keep that option open. “We haven’t decided whether you just continue to support it or whether it is too expensive and out of our focus to do,” Jorgensen tells Ina Fried.

My guess is the latter. Soapbox still exists, but I only know this because Ina says so. A Google search for Soapbox gets you to the main MSN video page. I had to resort to a Bing search to find the Soapbox section.

It’s an amazing turnabout, really. When Google (GOOG) bought YouTube for $1.6 billion in 2006, conventional wisdom was that user-generated video was the future, and that the age of “professional” video content was just about over. Three years later, those still in the Web video business–a pool that is shrinking daily–are doing their best to highlight how much stuff they have from grownup pros.

So treasure videos like this “funny dog” clip while you can.

]]> http://mediamemo.allthingsd.com/20090617/microsoft-ready-to-give-up-on-its-would-be-youtube-too/feed/ 2 http://mediamemo.allthingsd.com/20090424/apple-hits-1-billion-downloads-newspapers-celebrate/ http://mediamemo.allthingsd.com/20090424/apple-hits-1-billion-downloads-newspapers-celebrate/#comments Fri, 24 Apr 2009 11:32:20 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=6657 Apple says its customers have downloaded one billion apps for the iPhone and iPod touch from its iTunes store.

You can learn about this milestone, which took nine months to achieve, a couple different ways: You can read one of many, many stories about it or you can visit Apple’s own promotional countdown page, which tracked the tally as it approached the one billion mark.

Or you can simply visit the homepages of big Web publishers like the New York Times (NYT), News Corp.’s (NWS) Wall Street Journal or CBS’s CNET.com, all of which have once again handed over prime real estate to Apple (AAPL) for another intrusive/interesting ad that celebrates the event.

What the ads, or Apple, won’t tell you: the meaning of those downloads to Apple and its developers in terms of revenue, or even the mix of free downloads to paid downloads.

But Apple has been promoting the apps, quite successfully it seems, as a product line in and of themselves. And now the one billion milestone ensures that even more people will know about apps–either because Apple has paid for coverage or because it’s being provided for free by willing accomplices like… me.

In case you can’t get the ads to run on your screen (I was having trouble this morning, using Firefox), here are some screen grabs (click to enlarge):

Late last year, the music industry announced that it was going to stop suing music pirates because it had finally gotten Internet pipe companies to help it crack down on file “sharers.” One problem: None of the big cable or telco guys would fess up to joining the plan.

Now one of them finally has–in a very limited, toe-in-the-water, we’re-just-testing-this-out way. CNET:

“At a digital music conference in Nashville, Jim Cicconi, a senior executive for AT&T told the audience that the ISP has begun issuing takedown notices to people accused of pirating music by the Recording Industry Association of America, according to one music industry insider who was present….

Cicconi told attendees of the Leadership Music Digital Summit that the notices are part of a ‘trial.’ AT&T wants to test customer reaction, he said. Whether AT&T included any warnings that repeat offenders would see their service suspended or terminated is still unclear. Music industry sources said AT&T told managers at the top labels the trial letter would include strong language about the consequences of illegal conduct, but would stop short of mentioning service interruptions.”

Can’t really say that “strong language” is going to do much to help solve the music industry’s woes. But from the labels’ perspective, it’s better than nothing, which is what the cable and telco guys have traditionally done about file-sharing for the past decade or so.

But if you want to see what the pipe guys can do about file-sharing when properly motivated, keep your eye on what they do about TV and movie piracy.

Remember that the ISPs get zilch from the music business. But they spend billions a year for the right to show TV programs and movies. And they’re going to try very hard to “disincent” you from watching whatever you want, whenever you want, without paying them for that ability.

[UPDATE: A source familiar with the situation tells me that the company is indeed dead and that any remaining assets are being handed over to creditors.]

Music industry sources had told me that SpiralFrog, which offered free, ad-supported downloads–with several strings attached–was shopping itself in recent months.

When I asked CEO Joe Mohen about that on March 2, he insisted that his company was merely seeking “to have a strategic relationship with certain large companies to augment our sales team.” If he calls back, I’ll tell you what he has to say today.

It wouldn’t be surprising to see other music sites go dark, too. Several of SpiralFrog’s competitors have been looking for money or buyers as well.

The real news is that the company is trying to resolve a looming debt problem by slashing its dividend. CBS’s quarterly payout to investors is dropping from 27 cents to 5 cents.

What CBS didn’t announce–the now de rigueur massive write-down that so many of its big media peers have rolled out this quarter. Then again, CBS (CBS) took a $14 billion hit in the previous quarter, so that may have been sufficient.

Moonves on the dividend cut and his company’s debt issue: “By taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”

Sumner Redstone’s “it’s got to get better” quote: “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come. But one thing that is clear to me is that Leslie and his team are managing our businesses superbly with an eye toward future growth. CBS’s strength as a content provider will continue to position it for success.”

The breakdown:

CBS recorded revenues of $3.53 billion, just below Wall Street’s $3.56 billion consensus. Earnings from continuing operations were 20 cents a share, but strip out impairment charges and CBS would have notched earnings of 34 cents per share. That’s well above the consensus of 26 cents. [Apologies for flubbing this the first time out.]

TV: Revenue down eight percent, Operating income (before depreciation, etc) down 35 percent

Radio: Revenue down 18 percent, OI down 53 percent

Billboards: Revenue down 15 percent, OI down 51 percent

Publishing: Revenue up one percent! But OI down four percent

Quincy Smith’s Interactive group posted a revenue increase of 218 percent, but that doesn’t mean much given that CBS didn’t own CNET a year ago. If you include CNET’s results from last year, revenue increased one percent–not bad, compared to its peers.

If you’d said a year ago that a Web ad business posting a one percent increase is a good thing, you’d have been laughed off the Internet. But here we are. For the record, the unit recorded operating income of $51.7 million on revenue of $186.3 million.

Are you one of the CNET or CBS Interactive employees who got laid off last fall? Your collective sacking cost your former employer $2.6 million in restructuring charges.

I’ll confess up front that I don’t know, and the two companies themselves aren’t being helpful in explaining the kerfuffle. But here’s the best guess from online video folks who know both companies: Hulu isn’t pumped up about supplying its content to a competitor–especially since CBS isn’t supplying its content to Hulu.

For what it’s worth, Hulu, the joint venture between News Corp.’s (NWS) Fox and GE’s (GE) NBC, offers up this statement: “Hulu has contractual rights with regards to our relationship with TV.com and we are exercising those rights. Out of respect for their confidentiality, we will not disclose our discussions.” CBS offers up a more concise “no comment.” (News Corp. is the owner of Dow Jones, which owns this Web site.)

[UPDATE: CBS weighs in with a saber rattling statement on Thursday afternoon: “CBS Interactive is well within its rights to stream Hulu video content on TV.com under its agreement with Hulu. We are evaluating our next steps at this time.” ]

The background: CNET, which CBS (CBS) purchased last summer, has owned the TV.com domain for several years. This year, CBS relaunched the site as a Hulu-like video portal. Included in the launch was video from Hulu itself, which syndicates its stuff to dozens of sites, including MySpace, Time Warner’s (TWX) AOL, and Sling.com.

The wrinkle: Hulu’s distribution deal was inked with CNET when the company wasn’t owned by CBS. And CBS doesn’t provide its video to Hulu. You can connect the dots here, and that’s what several folks I’ve talked to today are doing. If either one of the companies decides to become more expansive, I’ll update when appropriate.

In the meantime, here’s a clip of “NCIS,” a CBS show you can’t get on Hulu:

And a clip from last weekend’s “Saturday Night Live,” an NBC show you can no longer see on TV.com:

The deal, which extends a previous agreement, has been finalized but not formally announced, multiple sources familiar with the matter tell me. A spokesman from Google’s (GOOG) YouTube said the company would not comment on “rumor or speculation”; Sony’s (SNE) music label declined to comment. Last week, CNET reported that the two companies were “very near” to a deal.

It’s unclear what the final deal terms are, but people familiar with the matter tell me that the negotiations revolved around three components: an upfront payment from YouTube to Sony, the minimum amount Sony will receive each time someone plays a Sony video on the site, and the way the two sides will split revenue generated by any of the label’s videos.

Those terms had previously tripped up Warner Music and YouTube in December, and Warner Music (WMG) artists have been taken off the site while the two companies try to work out a new licensing deal. Sony Music’s artists range from Britney Spears and Beyoncé to Bruce Springsteen and Bob Dylan.

Music videos are some of YouTube’s most popular offerings, but they have also been expensive for the video site. Under the terms of its old deals with the labels, YouTube agreed to pay the music companies either a per-stream fee or a share of ad revenue associated with the clip, whichever is greater. Since YouTube is just beginning to get serious about selling ads next to its content, it’s usually paying the per-stream fee, which industry executives peg at about half a penny per clip.

The music labels have been angling to increase that fee to perhaps eight-tenths of a penny, while Google has been pushing in the other direction, where the two sides would simply share any revenue the clips create.

Infuriatingly, seemingly all of Sony Music’s official YouTube videos have had their embedding function turned off, which means I can’t share them with you. So here’s an unofficial but still excellent clip of The Clash, who recorded for the company’s Columbia label.

Or at least, meet the placeholder Web site. The real one should launch in mid-March, says Greg Mason, who came to CBS via CNET and is overseeing the operation. He’s hired Eric Schurenberg, the former managing editor of Time Warner’s (TWX) Money magazine, to handle the editorial, which will focus on personal finance rather than general business news.

Mason is hiring additional folks in advance of the launch, including on-air talent; he wouldn’t divulge total staff size but I played the higher/lower game with him and I get the sense there will be something like a dozen people hired for the site.

Obviously, it’s an interesting time to be launching a finance-oriented site, and more on that in a minute. But what’s also interesting about MoneyWatch is that it’s a project dreamed up after CBS (CBS) bought CNET last summer for $1.8 billion. And it’s the first significant example of the broadcast network and the Web site integrating their operations, at least on the content side.

Right now, you can see the occasional CNET staffer showing up on CBS–I happened to glimpse Natalie Del Conte showing off flat-screen TVs for a bemused Harry Smith this morning–but not much more than that. And CBS folks don’t really contribute at all to CNET. But MoneyWatch talent is supposed to be a regular and important contributor for all of CBS’s news operations, as well as its radio stations.

Moonves never promised much editorial synergy when CBS bought CNET–it was really about adding a big piece of Web ad inventory to complement his old media assets. It will be interesting to see if there’s much to gain from an integrated operation here.

So: Why launch a personal finance site when everyone’s finances are being obliterated? Because that’s when everyone is acutely interested in personal finance, Mason argues. “Admittedly, it’s a little countercyclical,” he says, but argues that “CBS kind of figures that the economic crisis will be one of the big stories for the next 18 months.”

Fair enough. But there is plenty of competition out there chasing those same stories. Every major business news site has a personal finance component, and there are plenty of standalone personal finance Web sites out there already–and their traffic hasn’t increased during the meltdown.

The one exception here seems to be something called WalletPop, which is owned by AOL and which I’d never heard of prior to writing this story. Mason hadn’t heard of it, either, but somehow its traffic spiked up last summer, and it now commands more than 10 million uniques a month, per Comscore (SCOR).

Here’s a traffic chart that includes WalletPop vs. competitors SmartMoney.com, Kiplinger’s and MainStreet.com (click to enlarge):

And one that doesn’t:

And then there’s the bigger question: Even if you can get eyeballs, what do you do with them after that? As I’ve previously noted, at least one survey of finance Web sites estimates that revenue is down by as much as 30 percent this quarter, for mostly obvious reasons.

But let’s tackle one thing at a time: Convincing consumers to pay attention to money stuff instead of hiding in a dark room and rocking back and forth (that’s my strategy, at least) will be tough enough. Maybe by the time MoneyWatch figures out that trick, the ad market will have crawled back.

[UPDATE: Negotiations between YouTube and music labels are already getting unpleasant: Warner Music's clips are disappearing from the site, and both sides are taking credit for the move.]

Universal Music Group officials told CNET this week that they’re going to make close to $100 million from Internet videos this year–an 80 percent increase–and that most of that will come from Google’s (GOOG) YouTube.

I believe that may be possible–in part because people close to Universal Music Group told me the same thing earlier this year. But I think that those YouTube dollars may not continue to increase at the same rate, whether it’s for Universal or any music label.

That’s because YouTube’s current arrangement with the labels is a money-losing one, people familiar with the company tell me. And that’s unlikely to continue as the company renegotiates its deals with the four major labels–UMG, EMI, Sony (SNE) and Warner Music Group (WMG)–which expire throughout next year.

Here’s how the current deals work: Whenever someone clicks on an official video that’s been sanctioned by the labels, YouTube has to pay the labels either a per-stream fee or a share of ad revenue associated with the clip, whichever is greater. Since YouTube is just beginning to get serious about selling ads next to its content, it’s usually paying the per-stream fee, which industry executives peg at about half a penny per clip.

That kind of deal might have been OK during Google’s go-go days, but it’s unlikely to fly now. And as Google execs start sitting down with the labels, it’s reasonable to think they’ve got much more leverage. While music videos are some of the site’s most popular programming–look at how many label-sponsored clips like Avril Lavigne’s “Girlfriend” are among the site’s most popular offerings of all time–Google doesn’t need their blessing in the way that YouTube did when it was still transitioning from rogue copyright violator to upstanding citizen.

Meanwhile the labels are under great pressure to dig up dollars wherever they can find them because their core CD business evaporates day by day. Universal Music recorded some $4.4 billion in revenue during the first nine months of this year, so $100 million in high-margin video revenue would be a meaningful contribution to the bottom line. But it may be harder to get in 2009 than it was this year.

I can’t show you most of YouTube’s most popular clips here–the site disables embeds for those. But here’s a less-viewed one I do like.