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NBC Universal confirms end of YouTube deal

Company that played a pivotal part in YouTube's rapid rise is pulling out of a promotional deal so it can boost prospects of own video site, Hulu.com.

The shaky relationship between NBC Universal and YouTube has collapsed once again, as an NBC representative confirmed on Monday that the network has decided to stop posting promotional clips on the video-sharing site.

According to the representative, NBC Universal pulled out of the deal on Friday to support the upcoming launch of Hulu.com, the Internet video service founded by NBC and News Corp. that could compete for eyeballs with Google's YouTube. A test version of Hulu, which will stream full-length TV shows, is expected to make its debut within the next two weeks.

The breakup is important because it shows that some of YouTube's best-known former partners are satisfied to distribute their shows online themselves.

"NBC informed us on Friday that they were taking down their branded channel and clips," Ricardo Reyes, a YouTube spokesman, said in an e-mail. "Our relationship with NBC was a YouTube success story, so we hope NBC decides to post more original content and stay engaged with our users."

NBC Universal's first dealing with YouTube occurred in 2005 in what turned out to be a watershed moment for YouTube and Web video. Unauthorized clips from the show Saturday Night Live began appearing on the video-sharing site and helped generate publicity and big traffic.

At first, NBC Universal demanded that YouTube remove the clips, citing copyright laws. Then, the entertainment powerhouse reversed its decision. NBC cut a deal whereby it agreed to post promotional clips of some of its shows on YouTube. As many have pointed out, it was really NBC and those SNL clips that helped YouTube build a name for itself with the mainstream. At the same time, YouTube helped introduce SNL to a new generation of fans.

Back then, nearly everyone said NBC Universal was smart to cut a deal. Analysts were predicting that YouTube could one day be the gateway for all Internet video. The site would be a hub where millions looked for user-generated clips, full-length TV shows and perhaps one day feature films.

But the number of pirated clips on YouTube--users recording a favorite TV show or movie and posting the copy to the site--angered many media executives. To many in Hollywood, Google dragged its feet when it came to preventing piracy. The issue came to a head earlier this year when Viacom filed a $1 billion lawsuit against Google for copyright violations.

At the same time, Viacom and NBC started asking whether they really needed YouTube. The companies ratcheted up efforts to distribute video through their own sites and other Web portals.

Anyone wishing to watch an episode of Heroes can go to iTunes, NBC.com and soon Hulu.com. Fans of the Viacom-owned comedy series The Daily Show can just log on to that show's site.

So did Google blow it by playing hardball with the content creators? Did it push too hard when it should have paid the fees the big media guys wanted? This way it could have made those companies dependent on the traffic generated by YouTube and also hooked people on finding their favorite TV shows on the site. It might have been tougher to leave YouTube then.

But Google probably didn't have much of a choice. Such a scenario would have meant that Google would have emerged as a powerful gatekeeper. Google would have become to video what iTunes has become to music, and the TV and film industries are resolved not to follow the same path as the record labels. It was probably only a matter of time before NBC and others struck out on their own.

What this means for the near future is that YouTube, with far less professionally crafted content on the site, is going to compete for eyeballs with the likes of NBC and Viacom as well as a legion of other video plays cropping up seemingly every day.

In the coming months, as YouTube purges its site of more and more copyright content, we'll learn the real value of true user-generated content.