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MTV, Google in Distribution Deal

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From Reuters

Viacom Inc.’s MTV Networks has agreed to distribute clips from its cable networks over Google Inc.’s advertising network, in a test of what could become an economic model for Web-based video delivery, the companies said Sunday.

The project, a year in the making, marks the first time Google will distribute ad-supported videos across its AdSense network from a major programming provider.

The project will begin testing later this month. Google’s AdSense network currently handles primarily text and graphical-oriented brand advertising.

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The MTV trial, if successful, would highlight the progress Google is making in evolving beyond its reliance on delivering Web-based text ads, from which it derives most of its revenue and profit.

Viacom’s exclusive deal with Google also marks the first time MTV will syndicate its shows across the Web beyond the company’s own websites.

The change parallels what Viacom has done on cable and satellite TV services for the last 25 years.

“The basis of content on the Internet is shifting from text to video. This is the first way to distribute our content widely across the Internet,” Michael Wolf, president of MTV Networks, said in an interview.

Shows including Nickelodeon’s “SpongeBob SquarePants” and MTV’s “Laguna Beach” would be offered to websites that are in Google’s AdSense network, supported by advertising.

Website owners can embed an MTV-branded video box directly on their sites, which will feature ads sold by MTV’s sales force.

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MTV will take the largest portion of ad revenue, which will be shared with Google and its affiliate network sites, Wolf said. He said Google had built specialized technology for the test.

The move to embrace ad-supported Web video delivery comes amid an increase in interest in watching videos online made possible as more consumers subscribe to high-speed Internet services.

YouTube, a pioneer that has become the early market leader, serves up more than 100 million short-form videos a day. Most are excerpts from popular television shows or music videos or are user-generated comic sketches. Google and rivals Yahoo Inc., AOL, News Corp. and Microsoft Corp. are racing to catch YouTube.

Viacom is also racing to plant deeper stakes in Internet businesses as its young viewers, who set the tone for changes in media consumption, are as apt to be as entertained by Web-based TV as they are by video games or their cellphones.

This year MTV launched a joint-venture Web business with Microsoft to retain viewers as the frothy double-digit percentage gains it once enjoyed in cable network advertising begin to taper.

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