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It’s easy to call MTV’s decision to restrict third party websites from embedding videos as a media company thinking within the box, but that’s unfair.

Last year, many criticized the WSJ for not canning the paid subscription strategy, but then as the ad market tanked (along with the economy), preserving the $120M paid business proved to be a wise move, especially with competitor NYT itching to find a paid content strategy.

The dichotomy runs across many levels:

1 - For traditional media, in boom times they can allow themselves to think “open up and give away”, whereas in bad times it’s “close up and batten down the hatches”.

2 - There is also a very distinct strategy between upstarts and established brands. MTV doesn’t need to allow others to embed videos to build a brand or augment its audience. Of course, it would get more reach, but at the expense of revenue (at least in the short term). In this environment, Viacom (NASDAQ:VIA) (MTV’s parent) can’t allow itself to think too long term, what with traditional revenue streams being decimated.

This is the key nuance: We at WatchMojo.com allow users to embed our videos in blogs, but we need to do things like that to build distribution, but even we don’t totally give away our content, generally opting for licensing deals with media companies that want to distribute our content. MTV is doing the same thing: users will continue to be able to do this, but developers can’t ransack MTV’s library in exchange for more visibility alone.

This begs the question: Even if individual users cannot embed the videos from MTV, would they get them elsewhere or be forced to go to MTV? Not sure what will happen. A site like Imeem might allow the embedding, but when you consider that Imeem was forced to cut costs and looking to shop itself, you have to ask if that is any better of a strategy? Imeem, after all, is trying to become a destination, and MTV’s decision means that it just doesn’t want third party sites building destinations on the back of MTV’s licensing deals.

Ultimately, as crazy as it sounds, you need people to engage with you on your terms.

3 - Those who push for the embeddable strategy don’t actually produce or own the content. YouTube is the company that made embeddable videos an explosive growth strategy, but let’s be fair here: YouTube was trying to run ahead of the piracy issue avalanche, and since it did not own the content, it didn’t care to see other sites host the content, be it if the other site is a blog or a massive social network like MySpace, which helped fuel YouTube’s growth.

With the economy tanking and the whole Web 2.0 buzz fading, what used to be considered crazy is turning out to be good old common sense. Running WatchMojo.com, I would not disable the option to embed our videos, but if I were running Viacom’s video strategy, I would consider it…

This also reinforces what I’ve been saying all along: The value of videos isn’t simply the sum of what you charge for the content via ads. If you build an audience around video content, there’s a lot of value there and MTV is trying to reclaim it.

Source: MTV's Anti-Embedded Video Stance Isn't as Crazy as It Sounds