THE good news for broadcasters and music companies is that YouTube is trying to stay legitimate by placating Universal Music and having Google’s resources at its disposal.

However, the bad news — for traditional media owners — is that both companies want a share of the lucrative advertising revenue that was once the exclusive preserve of powerful broadcasters.

A combined Google/YouTube will create a mighty online competitor to ITV or Channel 4, and easily the largest broadcaster of clips on the net. In August an estimated 5.1 million Britons visited Google or YouTube at least once, according to Nielsen NetRatings, and traffic to both sites is growing fast. In the agreements announced yesterday, both YouTube and Google persuaded the record companies to share advertising revenues generated by their content. For a music major, such as Warner Music, that represents a potential new stream of revenue.

However, commercial broadcasters are dependent on advertising and most would prefer to keep viewers on their own websites — although, significantly, the US network CBS agreed to sign its own advertising revenue sharing deal with YouTube.

That is unlikely to be replicated soon in the UK. Channel 4 will launch its own video website in the next month or so, and the broadcaster is keen to find ways of consolidating viewing at its own website, so that no revenue leaks to third parties.

The problem for traditional broadcasters, though, is whether they can deliver meaningful audiences online as well as on air. If they struggle, they will be forced into partnerships with the video portals, whose financial power is only beginning to emerge.

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