Poor old ITV. Not only is the broadcaster battling crippling ad revenue regulation and losing revenue as the recession bites, it has also proved immensely ill-equipped to deal with the future of online video.
Susan Boyle, the Scottish singer from Britain's Got Talent, was an instant worldwide hit on the back of her appearance on the show, with clips posted on YouTube alone reaching 220 million viewers.
But how did that help ITV? People were watching those clips for free. Outgoing executive chairman Michael Grade branded YouTube a "parasite" that lived off content created by the commercial broadcaster, and even Terry Wogan mocked ITV on his Radio 2 breakfast show.
But by the time the show came to an end on 30 May, ITV was singing a different song.
Rupert Howell, ITV's managing director of brand and commercial, used his speech at Media Week's annual Media 360 conference last month to dismiss claims that the channel failed to cash in on Boyle's online popularity, calling such stories "ill-informed rubbish". "On ITV.com, Susan Boyle's audition clip has had 1.5 million fully revenue-generating views to date," he insisted.
"Video views on ITV.com are up 1,250% year on year and it's also worth noting that, in the UK, views of Susan Boyle on ITV.com initially outstripped views on YouTube before Susan became a global phenomenon."
In other words, Howell claims ITV has found a way around gloomy predictions from commentators such as Chris Anderson, editor-in-chief of Wired US, that the TV industry is working on a broken business model. "The model for TV advertising is to pretty much annoy 90% of the people in the hope of reaching the 10%," Anderson believes.
He says: "An annoyance-based advertising medium doesn't seem like a good thing. Why have they got away with it for so long? Because video advertising is very effective and there's no other way to get video advertising out there. We have not quite figured out how to do video advertising online - for example, YouTube still doesn't make money.
"But we will. We have been charging more and more for less and less reach in television for decades. The TV advertising model is like a house of cards and we were just waiting for an alternative to arise."
Indeed, broadcasters' fears over the past few years have centred on the idea that sites such as YouTube and Joost would hit TV revenues in the way Napster hit the music industry - giving away expensive shows for free.
When regulators nixed Project Kangaroo last year - preventing UK channels from forming a version of the highly successful ad-funded US site Hulu - the BBC, ITV and BT teamed up to start work on Project Canvas. The politically fraught project is an attempt to create an industry standard that would allow channels, producers and other content makers to link their own sites through a central, revenue-generating point.
In fact, buyers such as Greg Grimmer, media partner at Hurrell Moseley Dawson & Grimmer, argues broadcasters need not panic, since many media owners have been making money out of online video for some time.
"The Daily Telegraph, News International and The Guardian are making a small amount of money out of video on the back of good dotcom products -revenue that would previously have gone to TV," Grimmer says.
"Channel 4 - and to some degree Sky - have done very well on the back of good dotcom products and strong sales teams. Channel 4 has been selling its VoD content with pre-roll ads for the past three years, at significant premiums to TV cost-per-thousands."
He adds: "In fact, it is YouTube that is a commercial disaster. One of the UK's largest media-buying agencies spent £7m last year on Google Adwords and only £30,000 on YouTube. Google is never likely to make back the $1.8bn it paid for YouTube."
Revenue forecast
However, Patrick Walker, director of partnerships for YouTube Europe, is keen to rebut Grimmer's view. "We don't release revenue numbers for YouTube separately from Google, but most analysts who predict our revenues disagree with each other by a factor of five," he says.
"YouTube makes more money from video than our nearest competitor streams, full stop. We expect display revenue - of which video is a significant part - will match search revenue in five to 10 years' time."
Walker points to the fact that the deal struck by Channel 4 this month - the broadcaster is selling airtime around its Big Brother content on YouTube and has created a video channel for contestant audition tapes - has proved the most successful user upload partnership in YouTube's history.
YouTube's arrangements with Disney and CNN are more marketing-focused - it seems most of the strong deals are with old-school media owners, rather than makers of user-generated content. And that is for a very good reason, according to buyers.
Rhys McLachlan, head of implementation at MediaCom, says: "One of the problems for online video sites is that they have reached critical mass in a period of economic conservatism. The TV market has deflated by about 10% - that's a double-digit drop in a £3.3bn market. Many clients still want the surplus money spent, which gives us something like £100m-worth of ad budgets looking for a home.
"But clients don't want that money spent on a whim. That's why the trusted heritage media owners get the lion's share. And since that money is still controlled by time-buying departments, broadcaster rather than print, websites are benefiting."
McLachlan adds: "The newcomers - sites like Joost - are struggling because there is not a trusted system of measurement we can use to prove the worth of our campaigns. Until there's an online video equivalent to Barb, you will continue to see about 80% of online video adspend going to heritage media owners."
Last month's rumours that video-streaming site Joost has put itself up for sale after a round of job cuts seems to prove McLachlan's point, although Joost refused to comment on talk of a sale. Meanwhile, newspaper sites - such as The Sun, which claims to have more online video than ITV.com, The Daily Telegraph and The Guardian - have been competing furiously against broadcasters for online video ad spend.
Adam Freeman, commercial director of Guardian News & Media, says: "It is true that most of the online money is coming from TV departments. As our video offer consists of high-quality news and investigative reporting, we have to make quality of content arguments in a world that has traditionally bought News At Ten on audience terms.
"For ITV, it is just a matter of extending the Britain's Got Talent deal to ITV.com. However, we are trading on a cost-per-thousand against number of plays and I am very confident in the quality of our yield. We are finding our video advertisers are clients who have already bought into our brand in some way - as is true for the other newspapers. There is increasing respect for premium quality content among advertisers."
Freeman says pre-roll advertising - essentially 10-second TV spots transferred online - dominates online video. But Hugo Drayton, chief executive of online video advertising firm InSkin, believes the new forms of ad placement will help the market expand for publishing partners such as Bauer, Dennis Publishing and Telegraph Media Group.
Drayton describes the InSkin technology as "a living frame" around video content on publishers' websites. The technology counts down pre-roll ads, keeps the user informed and allows users to pull information on advertisers to their computer at any time. Importantly, InSkin's coding means ads can change according to the viewer's demographic, rather than having ads hardwired into the site.
Drayton also works with ITV, Media Week owner Haymarket and IPC, pricing roughly the same cost-per-thousand as pre-roll at £25 to £30 per thousand. But he insists his results are worth far more. For example, a recent Burberry campaign around video on the fashion pages of the Telegraph had a 14% click-through rate against online's typical 0.2%. Drayton, former chief executive of behavioural targeting company Phorm, argues: "Tie that in with demographic targeting and the sky's the limit."
In the meantime, buyers are waiting for the industry-wide metrics that would allow a proper dealing currency to emerge. Until then, they grumble, you're effectively gambling on the whims of the audience and the measurement system.
Which is ultimately what lost Susan Boyle her long-predicted victory. In front of 18 million viewers. Looks like ITV didn't do that badly after all.
Know your rights Legal issues for broadcast media owners
The legal issues for media owners when protecting and exploiting their television content are many and complex. The detail can be found in the Pact Terms of Trade - the minimum terms on which each broadcaster commissions programming from an independent producer, which vary for each broadcaster. The principles can be summarised as:
- Television programmes - and extracts of programmes - are protected by copyright in the filmed programme music used in the programme, and the script for the programme. Actors featured also have rights to their performance
- The rights to the finished filmed programme - for example, an episode of Britain's Got Talent - as well as any clips of the programme will be owned by the producer, for example Fremantle Media. The producer will have obtained permission to include any music, to film the actors, and to use a script
- The producer will license the broadcaster to broadcast the programme. In addition, under the Pact Terms of Trade, the broadcaster will be able to make the programme available for viewers to catch up on episodes throughout a series or for 30 days after the initial broadcast. With BBC programmes, viewers can only catch up for seven days. The rights then revert to the producer
- The broadcaster also has separate rights to the broadcast transmission itself. For example, a clip of BGT, recorded from TV and posted on YouTube, infringes Fremantle's rights to the programme and ITV's rights to the broadcast. Unauthorised posts also infringe the underlying music and script rights and actors' rights to their performances
- This means producers and broadcasters generally work together to tackle unauthorised clips on the internet. This may involve licensing official clips to YouTube for a share in revenue - usually shared by the producer and the broadcaster - or, in the case of BGT, working to ensure the unauthorised clips are removed, driving viewers to the official videos on the broadcaster's own website
Boyle's Law: How a deal was cut for the global Britain's Got Talent video hit
The Britain's Got Talent YouTube example may not have been the blunder the tabloids claimed it was, but the complexity of the negotiations and final arrangements are a chilling vision of the tortuous machinations to come if everyone is to profit from online video.
For a start, thanks to the terms of trade - a series of legally binding guidelines for contracts between broadcasters and independent producers - ITV's digital rights to the show are severely curtailed.
The broadcaster can only share in the revenue generated in the UK in a 50/50 split with Fremantle Media, the producer of BGT. Fremantle owns all other digital rights.
The furore surrounding the Susan Boyle clip meant no one at ITV, Fremantle or YouTube would speak on the record. What is clear is that, before the most recent series of BGT began on 11 April, the parties tried to cut a deal but couldn't agree terms.
According to ITV insiders, the broadcaster was offered the standard revenue split that YouTube offers all its content providers. However, ITV and Fremantle felt that, since the clip was premium content, it deserved a better share.
An insider explains: "The team took the view that we could make more money and dilute our brand far less by only doing ad deals around ITV.com footage. The deal we were offered by YouTube was the same sort of revenue split you would get if you were putting up user-generated content - and the quality of the clips would have been significantly worse.
"We sold out our entire ITV.com inventory pretty much as soon as Susan Boyle appeared. The vast majority of views to her in the UK were actually on ITV.com."
Fremantle refuses to discuss how it proceeded with negotiations with YouTube outside the UK, but US users are not seeing ads on the video pages - suggesting Fremantle and YouTube did not arrive at an agreement.
Meanwhile, YouTube agreed a deal where ITV used the site's video identity technology to patrol the site and keep tight control on the number of user posts on Boyle - or BGT footage - on the UK version of YouTube.
These electronic spiders hunt out offending clips and give ITV the choice of removing them or allowing them to remain. As a result, the clips became an online marketing tool for the programme.
Peak broadcast viewing figures of 18.5 million suggest most parties lived happily ever after.