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Hollywood takes a FreeWheel-ing approach to ads

FreeWheel, a start-up that helps content owners sell and manage ads across numerous Web sites, has signed some top media companies, including CBS.

Hollywood is starting to take note of a Silicon Valley start-up that claims to possess the answer to its Web-advertising woes: the trick, according to the company, is to take an opposite approach to DRM.

Managers at FreeWheel say one of the reasons TV networks and film studios are reluctant to syndicate their content widely on the Web is piracy. The other main reason is that it's hard to track, control, and manage their own ads when they're dispersed across dozens of sites.

FreeWheel says it has the answer, and some in the entertainment sector agree. About 15 media firms--including CBS, parent company of CNET News, and an undisclosed top film studio--have signed up to the service during the past six months, sources told CNET News. Joost is the only well-known customer that FreeWheel has publicly disclosed.

FreeWheel's founders, John Heller, Diane Yu and Doug Knopper, are former DoubleClick executives. Mark Naples/FreeWheel

A CBS spokesman declined to comment for this story.

So what does FreeWheel offer that scores of other companies in this space, including Videoegg and Panache, don't? According to an executive at one of CBS' competitors, who has seen a demonstration of FreeWheel's technology, the company makes it so much simpler for content owners to sell and manage their ads across numerous Web sites.

Doug Knopper, one of the three co-founders and co-CEO, says the company's system, known as Monetization Rights Management (MRM), works with existing ad management systems. MRM automatically allocates ad inventory, keeps track of ad revenue, and accounts for revenue splits between Web sites and content owners.

A TV network, for example, may have a different deal with each of the Web sites on its distribution network. FreeWheel automatically takes the terms for each deal and calculates where the money goes. The company's technology has emerged at a time when TV networks and film studios want to control the advertising around their content.

But how does this make DRM obsolete?

Until recently, Hollywood has relied on software that prevents consumers from copying movies and TV shows. FreeWheel says the better play is to syndicate all over the Web and allow users to watch on whatever site they want while selling ads on those sites--people are unlikely to steal if they can easily find content.

"There are three things that content owners want," Knopper said. "They want control over who is allowed to sells ads in their content. The second part is management, keeping track of the restrictions and exclusivity arrangements. The third is an accounting function. To date there's been no technological solution to all three things."

The executive from the entertainment company that competes with CBS agrees. He says that plenty of FreeWheel's competitors offer some of what the company provides but not all. Another media-company executive who has seen FreeWheel says the company has the right pedigree and understands what media companies need.

All three of FreeWheel's founders, Knopper, John Heller and Diane Yu, come from DoubleClick, the stalwart Internet-advertising company.