Mywaves cuts content and ad deal with MTV, a first

While many an entrepreneurs in Silicon Valley imagine their start-ups replacing established media companies, fast-growing mobile video startup MyWaves is instead working with the big companies.

Today, for example, it is announcing a deal with MTV, where MTV will — for the first time in its history — license its content to a third party mobile site that is not related to a carrier.

MTV will also sell advertising on the MyWaves site and the two companies will split revenue from any sale either company makes for ads that appear on MyWave’s MTV content.

Yes, all this is happening even as MTV’s parent company, Viacom, continues to try to sue Google’s YouTube for $1 billion in damages, due to YouTube publishing copyright-infringing clips of Viacom-owned videos. More context: Viacom is so serious about hording its content that it’s even refusing to work with Hulu, the online video startup supported by Fox and other large media companies that is publishing these companies’ premium content, hoping to make it profitable on the web.

Previously to this MyWaves deal, if mobile users wanted to watch an MTV video they would have to pay a carrier a flat monthly fee to access it. (Note: Sprint, my former carrier, offered this service, and I stopped checking it out as soon as I hit the paywall.)

Sunnyvale, Calif.-based MyWaves’ advertising services will allow it, and MTV, to sell ads based on user demographics, such as country location. On the one hand, MTV works with a large number of major advertisers, on the other hand, MyWaves works with a lot of companies experimenting in mobile advertising. For example, Microsoft is running an ad campaign on MyWaves, advertising Office to MyWave’s users in India. The revenue-share agreement isn’t disclosed, chief executive Rajeev Raman tells me, except that revenue is split in part based on which partner made the sale.

One big issue with video distribution — both online and mobile — is that they have yet to become profitable businesses. The mobile advertising market is worth $100 million in its entirety, Raman estimates, and that’s not just video, its also text message and voice advertising, and other formats. That number won’t get most investors excited at the moment, but mobile web services are growing fast, and new forms of advertising are being developed. For example, Raman says that on MyWaves, users don’t mind 15-second ads that play before a video (pre-roll ads, in industry lingo), even though they dislike pre-rolls on web videos: The reason is that any user who’s willing to use their mobile device to watch a video is willing to put up with the 15-second hassle to watch the video for free.

Meanwhile, advertisers want to have their products paired with professional content because they know what it will be, whereas they don’t want to be paired with user-generated content (as seen on YouTube) because it may not be up to the quality and taste of the advertiser’s brand.

In fact, high-quality content has already led to MyWaves seeing a sharp spike in traffic: The site had more than five million unique visitors last December and has been growing at a monthly rate of 15 to 20 percent since then, Raman says. The average MyWaves users comeback seven times a month, watches five clips and stays on the site 19 minutes, he claims.

So MyWaves seems to be doing well by working with content-creating companies — stay tuned for a post later today that explores how this strategy has been implemented.