Want to watch YouTube on your TV? There are plenty of devices and services that let you do that, with more on the way.

But starting next month, at least one gadget is getting its YouTube feed shut down. Syabas Technology, which makes a line of set-top boxes called “Popcorn Hour,” says Google’s (GOOG) video site has told it to remove YouTube content beginning December 2.

This one is a straight he said/he said: Syabas, via a blog post from COO Alex Limberis, says it has an agreement to use YouTube’s clips, but that YouTube had changed the terms of the agreement recently. YouTube won’t address that claim directly, but offered this statement:

Since July of 2008, YouTube’s Terms of Service has restricted implementations for televisions based on our APIs. YouTube has been in active discussions with various developers on how best to implement YouTube on set top boxes and TVs. There are several companies, however, that have deployed solutions, like video scraping technology, to circumvent the rules and violate YouTube’s Terms of Service.  Companies that have negotiated agreements to use our APIs, like TiVo, Sony, Panasonic and PS3 are not impacted.

The first-gut reaction here is to draw a parallel between this move and Hulu’s attempt to prevent video software start-up Boxee from using its stuff.

But in that case, at least, Hulu was trying to restrict access to a data stream it was making freely available to the rest of the world. Here, both sides agree that YouTube requires a contract before it will release its API to commercial partners.

So, the real question is: Did the two companies have an agreement, and what if, anything, has changed recently.

Gentlemen?

[T-shirt image courtesy of Zazzle.com.]

For those who haven’t been following along, here’s what we know about Vevo:

• It will be powered by Google’s (GOOG) YouTube, which will share ad revenue with the joint venture.
• It is being run by Rio Caraeff, Universal’s veteran digital guy.
• In addition to its equity partnership, its distribution strategy is modeled after Hulu: Sony and Universal videos will appear exclusively on the site and/or YouTube, but the site plans on licensing its stream to other outlets, as Hulu does with portals like MySpace and Comcast’s (CMCSA) Fancast. One obvious place to license the stuff: Hulu itself.
• Neither EMI nor Warner Music Group (WMG), which has created its own Vevo-like channel with YouTube, is participating in the venture, but they could.

But oddly, the deal is the only one of its kind. While the big music labels have played footsie with Hulu in the past, they have yet to actually move any of their clips there.

That could still happen one day, and the site hints that you may see more clips coming down the road. But Hulu is less valuable for the labels than it could have been a year ago: Since then, three of the big four have struck deals that give them much more incentive to show their stuff on Google’s (GOOG) YouTube, the world’s biggest video site.

Vivendi’s Universal Music and Sony (SNE) have a deal that locks up their stuff exclusively on Vevo, a sort of “Hulu for music videos” that will be powered by YouTube. And Warner Music Group (WMG) has convinced YouTube to give the label its own branded channel for its clips.

No word on financials for the Hulu deal, but I’d surprised if this generates much cash for EMI. Hulu’s core partners–News Corp.’s (NWS) Fox, GE’s (GE) NBC Universal and Disney’s (DIS) ABC–have deals that let them keep 70 percent of any ad revenue their stuff generates on the site. But other partners get closer to 50 percent.

In other Norah news, my soon-to-be sort-of neighbor is having construction problems. Here she is taking on one of the great Wilco songs:

It’s not clear if News Corp. (NWS) will end up investing in the joint venture, which is designed to control distribution of “print” content to readers like Amazon’s (AMZN) Kindle and Apple’s (AAPL) rumored tablet, or if the company will simply agree to tailor its stuff–most notably, The Wall Street Journal–to the joint venture’s standards.

In either case, News Corp. has yet to officially sign on, sources tell me. An announcement formally acknowledging the JV itself is supposed to be a couple of weeks away, though I have been hearing this for at least six weeks.

No comment from News Corp. or Time Inc., the Time Warner (TWX) publishing unit that has been assembling the JV. Other expected partners include Hearst, Condé Nast and, perhaps, Meredith. (Disclosure: News Corp. owns Dow Jones, which owns this Web site.)

In some ways, News Corp. is an obvious partner for the coalition, which I like to call “Hulu for magazines.” Murdoch has been an outspoken critic of Amazon’s distribution and pricing policies; he argues that by controlling the subscription of digital newspaper and magazines delivered through its e-reader, Amazon deprives publishers of a valuable asset.

Murdoch also wants more money for the stuff it does sell: In an earnings call last week, he said that while the bookseller was now paying his company up to $6.50 a month for each $15 monthly subscription to The Wall Street Journal, that split wasn’t good enough.

The JV is supposed to solve those problems for publishers by letting them control sales, customer billing and pricing. But it is also primarily designed with magazine publishers in mind, and News Corp. isn’t in that business.

Meanwhile, New Corp.’s Dow Jones unit is proprietary about the system it has already built to handle subscriptions to the Journal’s print and online editions and its BlackBerry and iPhone apps.

While it’s possible that the JV could use the Dow Jones subscription/commerce platform as the technological base of the JV, Dow Jones could be prickly if asked to play well with others. “Newspapers and magazines, don’t mix well, for reasons that aren’t obvious to the outside world,” says a News Corp. executive briefed on some of the company’s conversations.

In any event, balancing different partners’ interests is only one of the hurdles facing the JV. Some others, from the story I published last month:

• They’ll have to convince consumers who already have billing relationships with Amazon, Apple and other vendors to sign up with yet another service.
• They’ll have to convince device makers to play along with the strategy, which runs counter to many of their own plans. Both Amazon and Apple, for instance, have intentionally created closed systems that give them control of both devices and distribution.
• They’ll have to create content consumers want to buy. The new product can’t simply be a digital version of the magazines they’re already printing: That’s already available on the Web, and consumers have shown almost no interest in paying for it, and advertisers haven’t fully embraced it either.

So what exactly will the JV be selling? That’s probably the most difficult question for publishers to answer, made even more difficult because they don’t know what capabilities the e-readers of the future will boast. Apple for instance, refuses to even acknowledge to Time Inc. executives that it plans to produce a tablet device, let alone provide them with specs.

Alas, the Foursquare conference, hosted by the Quadrangle PE fund, is an invitation-only affair. And the event, which kicks off tomorrow, is closed to the press except for reporters onstage to interview the stars. And those conversations don’t get released to the public.

That’s a particular bummer this time. Because the Quadrangle guys–who have had a rough year–had the foresight to get a lineup that includes GE (GE) CEO Jeff Immelt, who appears to be in the final stages of selling NBC Universal to Comcast (CMCSA) CEO Brian Roberts, who will also be onstage. Sure would be nice to hear what they say.

Another panel that piques my interest, if only because of the title: “Are Popularity and Profitability Correlated?” It features Twitter’s Stone, LinkedIn founder Reid Hoffman and YouTube co-founder Chad Hurley. And would-be moguls are represented by a start-up pitch panel that includes Dennis Crowley of Foursquare, the superbuzzy mobile service whose name has nothing to do with Quadrangle’s conference.

So once again, here’s the complete list of those you won’t be hearing from this week as they gather at the Plaza in Manhattan. Unless, perhaps, one of my more ambitious colleagues sneaks in–I’m thinking of you, Bobby MacMillan–and gets us a first-hand account.

2009 SPEAKERS
EMILIO AZCÁRRAGA President, Board of Directors and CEO, Grupo Televisa
DENNIS CROWLEY Co-Founder, foursquare
BARRY DILLER Chairman and CEO, IAC; Chairman, Expedia, Inc. and Ticketmaster Entertainment, Inc.
BRIAN DUNN CEO, Best Buy
CHARLES FORMAN Founder, OMGPOP
REED HASTINGS Founder, Chairman and CEO, Netflix
REID HOFFMAN Executive Chairman and Founder, LinkedIn Corporation
CHAD HURLEY CEO and Co-Founder, YouTube
JEFF IMMELT Chairman and CEO, GE
PAUL JACOBS Chairman and CEO, Qualcomm Incorporated
OLLI-PEKKA KALLASVUO President and CEO, Nokia
JASON KILAR CEO, Hulu
LESLIE MOONVES President and CEO, CBS Corporation
ANNE MULCAHY Chairman, Xerox Corporation
JAMES MURDOCH Chairman and Chief Executive, Europe & Asia, News Corporation
BRIAN PHILLIPS CEO and Co-Founder, Thread
DAN PORTER CEO, OMGPOP
BRIAN ROBERTS Chairman and CEO, Comcast Corporation
PAUL SAGAN President and CEO, Akamai
ERIC SCHMIDT Chairman and CEO, Google
IVAN SEIDENBERG Chairman and CEO, Verizon Communications
BIZ STONE Co-Founder, Twitter
HOWARD STRINGER Chairman, CEO and President, Sony Corporation
BEN VERWAAYEN CEO, Alcatel-Lucent
DAVID ZASLAV President and CEO, Discovery Communications

MODERATORS
MARC ANDREESSEN General Partner, Andreessen Horowitz
KEN AULETTA Author and Writer, “Annals of Communications”, The New Yorker
MARIA BARTIROMO Anchor, Closing Bell; Host & Managing Editor, Wall Street Journal Report, CNBC
JAMES CITRIN Co-Leader, Board & CEO Practice, North America, Spencer Stuart
DAVID FABER Anchor, Reporter, CNBC
MICHAEL HUBER Co-President and Managing Principal, Quadrangle Group
BECKY QUICK Co-Anchor, Squawk Box, CNBC
GEOFFREY SANDS Director & Leader, Global Media, Entertainment & Information Practice, McKinsey & Co.
JOSHUA L. STEINER Co-President and Managing Principal, Quadrangle Group
GEORGE STEPHANOPOULOS Anchor, This Week; Chief Washington Correspondent, ABC News

That’s the pitch Apple has been making to TV networks in recent weeks. The company is trying to round up support for a monthly subscription service that would deliver TV programs via its multimedia software, multiple sources tell me.

Apple (AAPL) isn’t tying the proposed service to a specific piece of hardware, like its underwhelming Apple TV box or its long-rumored tablet/slate device. Instead, the company is presenting the offer as an extension of its iTunes software and store, which already has 100 million customers.

A so-called “over the top” service could theoretically rival the ones most consumers already  buy from cable TV operators–if Apple is able to get enough buy-in from broadcast and cable TV programmers.

That’s a big if: Apple has told industry executives it wants to launch the service early next year, but I have yet to hear of a single programmer that has made a firm commitment to the company, which has tasked iTunes boss Eddy Cue with promoting the idea.

Industry executives believe that if anyone jumps first, it will be Disney (DIS), since CEO Bob Iger has shown a willingness to experiment with Apple and iTunes in the past: In 2005, Disney was the first player to sell its programming on iTunes, via a-la-carte downloads. And Apple CEO Steve Jobs is Disney’s largest single shareholder, a result of Disney’s 2006 acquisition of Jobs’s Pixar animation studio. Apple didn’t respond to requests for comment.

Network executives I’ve talked to are intrigued by the idea–they are eager to find new revenue streams–but are also wary, for several reasons.

Cable networks, for instance, don’t want to threaten existing relationships and subscription fees from cable providers like Comcast (CMCSA). And programmers are also worried about the effect a subscription service would have on advertising revenue: Even if the service didn’t distribute TV programs until after their initial air date, that could cut into ratings, which now measure viewership over the course of several days.

But the move to deliver TV and movies over the Web is already well under way. Netflix (NFLX), for instance, already bundles free streaming movie and television along with its disc-by-mail subscription service. iTunes and Amazon (AMZN) rent movies on a one-off basis, and Google’s (GOOG) YouTube is trying out the same thing. Meanwhile, Hulu, the joint venture between GE’s (GE) NBC, News Corp.’s (NWS) Fox, and ABC, is figuring out how to launch a paid service that may include rentals, paid downloads or subscriptions.

So Apple’s proposed subscription service, which the company has floated in the past, is no longer a huge stretch. Says one executive briefed on the company’s plans: “I think they might get it right this time.”

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?

What happened? Apparently, Microsoft (MSFT) realized that “Family Guy” is a ribald, off-color sitcom–but only after showing up to the taping of “Family Guy Presents: Seth and Alex’s Almost Live Comedy Show.”

Variety says “Family Guy” creator Seth MacFarlane and actor Alex Borstein did indeed promote Windows 7 during the Oct. 16 taping. Alas, “for most of the special, however, MacFarlane and Borstein made typical “Family Guy” style jokes, including riffs on deaf people, the Holocaust, feminine hygiene and incest.”

Whoda thunk?

Give Microsoft credit, though: At least the company figured this one out before the show actually aired–unlike the vomit ads it used to push Internet Explorer 8 last year. And, in defense of MacFarlane and Borstein, Google (GOOG) hasn’t seemed to run into any problems with the pact it struck with MacFarlane last year.

Microsoft’s backpedal, via Variety:

“We initially chose to participate in the Seth and Alex variety show based on the audience composition and creative humor of ‘Family Guy,’ but after reviewing an early version of the variety show it became clear that the content was not a fit with the Windows brand,” said a Microsoft spokesperson. “We continue to have a good partnership with Fox, Seth MacFarlane and Alex Borstein and are working with them in other areas. We continue to believe in the value of brand integrations and partnerships between brands, media companies and talent.”

Here’s a representative sample of the show Microsoft was betting on: A clip that Hulu says is one of its users’ favorites. Warning! The following includes flatulence, some sex talk and some racial stereotyping. No mention of Microsoft products, though.

Is Hulu putting up a pay wall around its Web TV site? Nope.

Does Hulu want to charge people to watch Web TV? Yes.

Confused? Don’t be.

It’s pretty straightforward: Hulu, the joint venture between News Corp.’s (NWS) Fox, GE’s (GE) NBC Universal and Disney’s (DIS) ABC, doesn’t plan on charging people to watch the stuff it’s currently airing on the site–a mix of first-run shows from broadcast TV, a limited number of cable TV shows and a smattering of movies. But Hulu is trying to figure out how to create some kind of premium offering where you’ll pay for stuff that isn’t on the site right now.

That’s what Hulu’s backers have been saying for months, so it’s a little puzzling that News Corp. COO Chase Carey’s comments got folks worked up yesterday. Meanwhile, multiple sources familiar with Hulu’s plans tell me that…Hulu doesn’t actually have a plan yet, but it is trying to piece one together.

There are some pretty obvious ways to go here. Hulu could sell movies or TV shows on a pay-per-view basis, or it could sell subscriptions to shows it doesn’t offer now or to a deeper offering of shows it already has. You could call it “Hulu Plus” (no charge for that one, guys).

If you’re a fan of Fox’s “Family Guy,” for instance, Hulu is only of limited help: The site only has the most recent five episodes. So how much would you pay to watch the rest of them?

If you don’t have an answer for that, don’t worry–Team Hulu doesn’t know, either. Nor can they tell you if airing free shows on Hulu has cut into other revenue streams like broadcast TV advertising or DVD sales, even though “we’ve done a thousand regression analyses on this,” says an industry executive involved in the site.

Do bear in mind that this was a problem Hulu’s backers didn’t really envision when they were dreaming up the site; at the time, they were most concerned with building a video site that would allow them to barter with Google (GOOG) and Apple (AAPL).

Now they own one of the biggest video sites on the Web, one they say is performing ahead of plan. And Hulu is selling enough advertising that it’s coming close to reaching break-even, according to executives I spoke to this week.

But at the very least, adding a pay component to Hulu helps mollify those who fear the site is cannibalizing their existing businesses. Or who simply want another revenue stream. And a pay element dovetails with Hulu’s interest in joining up with the “authentication” movement pushed by cable guys like Comcast (CMCSA) and Time Warner (TWX).

Meanwhile, here’s the use case for Hulu that its backers originally envisioned–“catch up viewing.” I was on a plane when last night’s episode of the “The Office” aired, but I can watch the whole thing–with ads I can’t skip–on my laptop today. And so can you:

Terms of the deal haven’t been disclosed, but I’m told the transaction values the joint venture at $300 million. Google’s (GOOG) YouTube isn’t an owner in the JV but will share revenue in exchange for lending Vevo its massive distribution platform. The site, which will exist both outside YouTube and within YouTube as a branded channel with its own player, is scheduled to launch later this year.

Vevo has been seeking an outside money source for some time; PaidContent had previously reported the venture was looking for a $300 million valuation.

But the most important part about the outside money is that it’s outside: The investment is designed in large part to allay antitrust issues, given that Vevo’s existing owners represent two of the four major music labels. Providence provided the same cushion to Hulu, which was originally put together by GE’s (GE) NBC Universal and News Corp.’s (NWS) Fox.

Abu Dhabi Media, which is owned by the Abu Dhabi government, has made several forays into Western media, but until now, all of its deals have been focused on Hollywood. Two years ago, for instance, the company announced a $1 billion pact with Time Warner’s (TWX) Warner Brothers to finance movies and build a theme park, though that deal has yet to yield much activity. Earlier this month, it made a much more modest $10 million pledge to back Walter Parkes and Laurie McDonald, the movie producers who once ran DreamWorks studios.

Here’s the release:

VEVO PARTNERS WITH ABU DHABI MEDIA COMPANY

Abu Dhabi Media Company Joins Universal Music Group and Sony Music Entertainment
for World Class Online Premium Music Service

New York, New York, Monday, October 19, 2009…VEVO, the new premium music video and entertainment service powered by YouTube, has received a strategic investment from Abu Dhabi Media Company (ADMC), one of the world’s fastest growing, multi-platform media organizations. The announcement was made today by Doug Morris, Chairman & CEO of Universal Music Group and Co-Chairman/Founder of VEVO, Rolf Schmidt-Holtz, Chief Executive Officer of Sony Music Entertainment & Co-Chairman of VEVO, Rio Caraeff, President & Chief Executive Officer of VEVO, H.E. Mohamed Khalaf Al Mazroui, Chairman of ADMC, and Edward Borgerding, Chief Executive Officer of ADMC. Terms of the agreement were not disclosed.

With this transaction, VEVO is now formed as an independent and fully funded entity with Universal Music Group (UMG), Sony Music Entertainment (SME) and Abu Dhabi Media Company (ADMC) as founding shareholders. Funding from the shareholders will enable VEVO to come to market with an attractive premium music offering for consumers and advertisers alike.

Launching in the United States and Canada later this year with a further international roadmap to be announced, VEVO will be a premium destination and syndication network for the very best in top-notch music video content that will leverage the massive existing traffic of YouTube.

“This global partnership flags Abu Dhabi Media Company’s commitment to establish a leading position in the digital media industry. It is part of an integrated approach to expanding the global digital presence and brand portfolio of Abu Dhabi Media Company, and it illustrates our partnering approach with innovators in digital media services and technologies”, stated H.E. Mohamed Khalaf Al Mazroui, Chairman of ADMC, on joining UMG and SME to create VEVO.

“It’s a credit to the music community, and to the global opportunity that VEVO represents, that we have been able to attract such a solid investment partner with the vision and track record of Abu Dhabi Media Company,” commented Rio Caraeff, President & Chief Executive Officer of VEVO. “Abu Dhabi Media Company brings to the venture important funding support and a team with enormous global media experience and insight, and we look forward to working with them to seize the many opportunities ahead of us.”

“Consumer demand for music video entertainment is growing significantly today and is transforming the digital entertainment market and the music industry by fuelling new media business models. VEVO fits our vision and goals perfectly, as we are expanding our capabilities and continue to build the market for digital entertainment around the world.  VEVO will redefine the way premium music video entertainment is consumed, created and shared in a global community of music audiences,” said Edward Borgerding, Chief Executive Officer of Abu Dhabi Media Company

“We’re now entering a new exciting phase in the digital media industry in the region and we’re determined to be at the forefront of it”, added Ricky Ghai, ADMC’s Executive Director, Digital Group. “With VEVO there’s real opportunity for incredible growth, as both brand advertisers and consumers are looking for new premium video experiences online.”

Check it out (click tables to enlarge):

Note that these numbers are actually all down from August. Apparently some of you spent your last days before returning to work or school in front of your Web browser.

Meanwhile, Nielsen’s Top 10 list has the usual suspects. That is–Google’s (GOOG) YouTube and then everyone else. Interesting to note the disparity between total audience and total streams on Hulu compared to Yahoo (YHOO) and Microsoft’s (MSFT) MSN. Hulu is attracting a smaller but much more engaged audience than the big portals.

At some point, this could be a problem for the joint venture between News Corp.’s (NWS) Fox, GE’s (GE) NBC Universal and Disney’s (DIS) ABC since advertisers ultimately want reach. But it’s still astonishingly early for the site–recall that it only went out of beta in March 2008, and doesn’t have a major portal promoting it.

One caveat: Note that for whatever reason, Web video publishers tend to push the numbers they get from comScore (SCOR) more than the Nielsen numbers. But directionally, they tend to say the same thing.

Allrighty, then. If you’re going to spend so much time watching Web clips, best to make sure you’re watching something excellent. Like this clip from last night’s “The Daily Show”–a classic evisceration of CNN. Jon Stewart and crew often go after the cable channel and its brethren, but this one is particularly good. Warning! It is more than 11 minutes long!

Now, three years after Google (GOOG) plunked down $1.6 billion for the video site, it seems to have figured out an approach that works for at least some big players: Hand over a chunk of the site to content creators, who get to control it, sell ads on it, program it with their stuff and share some of the ad dollars.

It’s a pretty straightforward compromise: YouTube gets some of the ad dollars that “premium” content–stuff you’d see on a TV screen, basically–can generate; content creators get access to the the gazillion eyeballs that the world’s biggest video site attracts. Examples: See the pacts that Sony (SNE), Disney (DIS), Time Warner’s (TWX) Turner, Warner Music Group (WMG) and Universal Music have hammered out in recent months.

And that sounds like the deal that YouTube and Britain’s Channel 4 have reached. Telegraph:

YouTube and Channel 4 have been in talks for at least the last six months and a contract is expected to be signed imminently. The Telegraph understands that Channel 4 has negotiated the right to sell its own advertising around its content on YouTube and share the revenue with the Google-owned site.

A senior television source close to Channel 4 said: “It was key for Channel 4 to be able to sell the advertising around its own inventory so it could extract maximum value from the deal and retain commercial control over its own property.

“When the Channel 4 content formally appears on YouTube, it will be branded exactly the same way as it is on the Channel 4 website. It will be a fully Channel 4 branded space and look as if someone has picked up 4 on Demand (Channel 4’s online catch up service) and put it on YouTube.”

…The partnership will be the first formal arrangement YouTube has agreed with a British broadcaster in which the majority of its content will be shown in full on the video-sharing site.

No comment from YouTube. If the report doesn’t pan out, I’m assuming it won’t have any impact on anyone reading this in the U.S.: The Web is worldwide, but these content deals tend to be specific to various territories, which means you won’t be able to watch British programming from the States. Fair enough: My non-U.S. readers always gripe about not being able to watch Hulu clips.

Warner (WMG) is handing those duties over to Outrigger Media, a New York-based rep firm that specializes in Web media (Outrigger’s preferred description: “Internet video sales and marketing firm”), the companies announced today; oddly, Warner’s release goes on and on without even once mentioning Google (GOOG) or YouTube. Go figure.

I’ll admit that I hadn’t heard of Outrigger before this morning, but I had heard of its CEO, Mike Henry, an ad sales veteran who was previously running ad sales for Veoh, one of the many video sites that aimed to become the next YouTube in the past few years. Turns out, Henry is still running ad sales for Veoh–the company has outsourced its ad sales business to Outrigger.

Warner’s strategy is different from the one rival Universal Music is taking with Vevo, the “Hulu for music videos” joint venture it launched with Sony (SNE), with help from YouTube. Vevo is creating its own in-house salesforce, to be led by Nokia (NOK) and and Viacom (VIA) vet David Kohl.

I can understand Warner’s reluctance to build a salesforce of its own–if you really want to do this stuff right, you’re looking at 20 or 30 people–but it seems that long term, if the labels have a future, it’s going to be primarily as a sales and marketing force, and you’d want to make a bet on that now. It will be interesting to see how this plays out.

Squires has spent the past few months convincing other publishers to join a new joint venture aimed at a market that doesn’t really exist yet–magazine-like publications to be delivered via e-readers like Amazon’s Kindle and Apple’s rumored tablet.

The idea: The new company, which will operate independently from the publishers that invest in it, will create a digital storefront where consumers can purchase and manage their subscriptions, which can be delivered to any device. The pitch: Control a direct relationship with consumers while gaining leverage with heavyweights like Apple (AAPL) and Amazon (AMZN).

Industry executives briefed on Squires’s plan say it has been well received by Time Inc.’s peers and that several major publishers, including Hearst and Condé Nast, are expected to sign on for the JV, which isn’t scheduled to debut until 2010. No comment from Hearst, Condé Nast or Time Inc., a unit of Time Warner (TWX).

Many of the venture’s big details have yet to be hammered down. At one point, for instance, Time Inc. had explored the idea of including newspapers in the new company’s offering, sources say. The JV may also want to include a noncontent partner as an investor, as Hulu did with Providence Equity and as Vevo, the “Hulu for music” JV that Universal Music is creating with Google’s (GOOG) YouTube, plans to do. That approach is supposed to appease antitrust regulators’ worries about a group of content companies banding together.

But the rough outlines of Squires’s plan are attractive enough to publishers, who are hopeful that mobile devices like the Kindle will create a new market for them. And if that market does show up, they want to make sure they’re the ones in charge of sales and distribution. That’s been a huge problem for the music industry, whose digital sales are essentially controlled by Apple. And it has already cropped up as a point of contention with Amazon, which currently handles sales for all content delivered via its Kindle reader.

Other selling points for the JV: The ability to set standards for mobile content and the ability to integrate advertising into the publications. One thing the company isn’t supposed to do: Create an e-reader itself.

The takeaway, via a Time Inc. presentation that has circulated among publishers: “our destiny with readers, advertisers and distributors … [is] in our hands.”

Of course, there are plenty of hurdles facing the joint venture, starting with the fact that media joint ventures have a checkered record at best (though Hearst and Condé, for instance, have already partnered on Comag, a wholesale distribution company). But there are bigger problems for Squires and company. For instance:

• They’ll have to convince consumers who already have billing relationships with Amazon, Apple and other vendors to sign up with yet another service.
• They’ll  have to convince device makers to play along with the strategy, which runs counter to many of their own plans. Both Amazon and Apple, for instance, have intentionally created closed systems that give them control of both devices and distribution.
• They’ll have to create content consumers want to buy. The new product can’t simply be a digital version of the magazines they’re already printing: That’s already available on the Web, and consumers have shown almost no interest in paying for it, and advertisers haven’t fully embraced it either.

So what exactly will the JV be selling? That’s probably the most difficult question for publishers to answer, made even more difficult because they don’t know what capabilities the e-readers of the future will boast. Apple for instance, refuses to even acknowledge to Time Inc. executives that it plans to produce a tablet device, let alone provide them with specs.

But publishers feel they’ve got nothing to lose by trying. “We know that traditional magazines are going away, and that magazines on the Web don’t work,” says a publishing executive working on the plan. “But this gives us a chance to serve the reader who will pay for content, and provide advertising that really works. Can you think of a better idea?”

The deal was hammered out by reps at a Tuesday meeting, Waxman reports, citing “two individuals informed about the meeting.” The $35 billion price tag happens to be the value that a recent JP Morgan report assigned to the company.

Comcast (CMCSA), in a statement, says the story is untrue: “While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate.” NBC Universal has no comment.

Clintonian parsers will note that Comcast’s denial has potential wiggle room: It isn’t denying, for instance, that the two companies had or are having talks. On the other hand, this is exactly the situation where corporate PR protocol calls for the “we don’t comment on market rumor and speculation” line. That way, you have the option of updating your statement if the story does turn out to be true. And for what it’s worth, I can’t recall the last time I saw a big, publicly traded company respond to an M&A story with this specificity.

UPDATE: The Los Angeles Times’s Joe Flint now says that Comcast is “kicking the tires” at NBCU, according to ”people familiar with the situation.” His report is much more hedged than Waxman’s.

All that said, this is a tie-up that has a first-blush logic to it: Comcast is flush with cash and could presumably take on more debt if it wanted to, and the company has shown an interest in branching out into content before. In 2004, it made a run at Disney (DIS). And the drumbeat for GE (GE) to dump its 80 percent stake in NBCU has been more or less constant, even while the industrial conglomerate insisted it had no interest in selling.

Those drumbeats get louder every year around this time, by the way. That’s because Vivendi, which owns the remaining 20 percent stake in NBCU, has a put option that kicks in every November and that could theoretically force GE into buying out the stake or spinning the whole thing out to the public.

More theoretical ammunition for a deal: Comcast is one of the few potential buyers that could swallow up all of NBCU. While there might be lots of people interested in NBCU’s cable properties (USA, Bravo, SciFi, etc.), there aren’t many who also want the company’s flailing broadcast property.

And while Universal’s film library is potentially attractive to some buyers, many of them–like Time Warner (TWX), for instance–have no interest in the film studio because they already have one.

If you want to play out the theoretical implications for digital, things could get very interesting. NBC is one of the founding partners at Hulu, the free Web TV portal that’s caused consternation for Comcast and other cable providers, which worry that the site is undermining the value of the TV programming they spend big money on. And Comcast and Time Warner have been trying out a “TV Everywhere” strategy that is, in part, a reaction to Hulu’s initial success. But let’s let the dust settle for a minute before we head in that direction.