By Scott Moritz, writer

Seeing no signs that the slowing economy is crimping consumer spending, Verizon (VZ) plans to raise prices on its nascent TV service.

The New York phone giant reported first quarter earnings that met Thomson Financial’s analyst estimate but missed the Bloomberg consensus by a penny Monday. On a conference call following the release, the company blamed the loss of a large former MCI business customer for some of the profit weakness.

The most striking news of all, however, was Verizon’s bullish take on consumer behavior. Verizon said it has been watching for warning signs, like increases in so-called uncollectible or deadbeat customers, but so far hasn’t seen anything to worry about. “I’ve seen no changes,” finance chief Doreen Toben told analysts on the call, referring to a spending slowdown.

Verizon is feeling so confident about paying subscribers that it plans a price hike.

“We will move up prices at the end of this quarter or next quarter,” Verizon executives said on the call. “We are very comfortable moving up the pricing at this point.”

The company said it probably won’t tamper with its $99-a-month promotional offer for its package of phone, Internet and TV services. Instead, officials said they’re looking to hike the price of the company’s a la carte TV service, which launched in 2005 and costs $48 a month.

Verizon has been winning business from cable companies like Comcast (CMCSA), Time Warner Cable (TWC) and Cablevision (CVC) as it pushes its Web video and TV strategy. On the flip side, as the cable companies have started selling phone services, telcos like AT&T (T) and Verizon have seen the decline in landline phone subscribers accelerate. In the first quarter, Verizon’s total phone line count dropped 8.2% from the prior year, a slight increase over the 8.1% pace for 2007. And residential lines fell by an eye-popping 10.9% from the same quarter a year ago.

Raising prices in the face of a economic slowdown is a bold move that borrows from the cable industry’s long-held strategy of continual rate hikes. Two things work in Verizon’s favor here, says one analyst: Phone and TV subscribers aren’t known to be the most vigilant consumers. They may not even notice they’re paying more.

Verizon’s about to find out.

By Yi-Wyn Yen

Google’s acquisition of ad server DoubleClick is supposed to help the search giant make a splash in the display advertising market. But it’s YouTube that Google is hoping will make it a big player on Madison Avenue.

“We’re spending a lot of time on YouTube right now because that happens to be a clear objective and clear opportunity,” said Tim Armstrong, Google’s president of advertising at a recent Bear Stearns media conference.

What isn’t clear is why Google (GOOG) hasn’t figured out how to make a profit from YouTube yet.

Google built its multi-billion empire by delivering text-based ads that appeal to marketers looking for a direct response. Now the search engine’s going after major brand advertisers who see video as an opportunity to connect with consumers on an emotional level.

For a company consumed by organizing the world’s information, Madison Avenue is an unfamiliar turf. “They’re starting to think about branding,” said Matt Sanchez, CEO of video ad network VideoEgg. “There’s a culture shift going on at Google.”

While display marketing isn’t Google’s forte, the company has created an appealing branding opportunity with YouTube. The videosharing site has become the go-to site for short, snacky clips. But some advertisers worry that, unlike watching an episode of Lost on ABC.com or a Saturday Night Live clip on Hulu, most of YouTube’s vast collection of campy, user-uploaded clips are unmarketable.

“This is a challenge for advertisers,” said Chris Allen, the video innovation director for media agency Starcom. Roughly 10 to 20% of YouTube’s content is professionally produced. That really starts to diminish the opportunities for brand advertisers.”

One media buyer takes a glass-half full approach. “We’re trying to figure out what is the value in brand association with content that’s not premium,” said Curt Hecht, chief digital officer for GM Planworks, which handles advertising for General Motors (GM). “The approach we take is, how can we package this in front of a ton of eyeballs.”

YouTube is the King Kong of online videos, and what it lacks in marketable clips it makes up for with its massive and engaged audience. In January, nearly 79 million viewers, or a third of all online viewers in the U.S., watched more than three billion user-posted videos on YouTube, according to comScore’s latest report.

However, delivering all those free video clips isn’t cheap. YouTube sends a staggering 1,000 gigabytes of data every second, or nearly 300 billion GBs each month. Several industry insiders estimate that YouTube spends roughly $1 million a day just to pay for the bandwidth to host the videos. By that number, YouTube downloads would account for roughly 3% of Google’s $11.5 billion operating costs for 2007.

YouTube, which makes the bulk of its revenue from selling display ads that run on the right-hand side of the site’s homepage, has not been a moneymaker for Google. The company states YouTube’s revenues last year were “not material” in a regulatory filing. The search giant paid $1.6 billion for the company in October 2006. “I’d be surprised if they broke $20 million in revenue in ’07,” said Anton Denissov, an online video analyst with the Yankee Group.

Part of the problem is that advertisers and companies like Google are still experimenting with what works in the web video market. Advertisers will spend $1.35 billion on online video advertising in the U.S. this year, according to eMarketer. That represents 1.5% of television advertising spending this year, and just 5% of all Internet advertising spending. The research firm forecasts that U.S. spending for web video ads will triple to $4.3 billion in 2011.

Wall Street is anxious for Google to turn the videosharing site into a cash cow. Last October during its earnings call with analysts, Google co-founder Sergey Brin said making money wasn’t a top priority. The company has focused heavily on refining a user’s experience and collecting data on how viewers find videos on YouTube. Dave Eun, who runs Google’s content businesses, said the company would “turn up the dial on monetization” next year.

Last fall Google introduced several types of ad formats with moderate success. Its says viewers are responding favorably to its overlay ads, which run on the bottom of a screen like a sports ticker 10 seconds after a video starts. A viewer can choose to close the ad or click on it to expand the ad before returning to the original clip. The overlay ads only appear on YouTube’s select premium content.

“We’ve been careful about testing different monetization approaches,” Eun said at the Bear Stearns conference on March 10. “We’ve purposely not taken the easy money. And frankly, there was a lot of easy money out there. We could have taken cut-down TV ads and pushed them down our users’ throats with pre-rolls.”

Not everyone is convinced that just because Google flips a switch, the YouTube money will start pouring in. “All of Silicon Valley has a hard time understanding that it’s not some spigot you turn on,” said VideoEgg’s Sanchez. “Maybe that’s how direct marketers work, but media buyers on the brand side don’t spend money that way.”

“There’s no silver bullet,” he added. “Google’s been testing and pushing and marketing its product, but it’s not suddenly going to do a billion dollars in revenue off YouTube.”

By Jessi Hempel

A day before the launch of Moblogic.tv, a new Web series created by the team behind WallStrip, CBS Interactive president Quincy Smith and his band of Silicon Valley veterans had the media to lunch on Thursday at Black Rock. His goal: to try to explain the thinking behind a strategy that drew Web viewers to spend 104 million minutes on the site in December. Compare that to NBC’s (GE) 62 million or ABC’s (DIS) 28 million minutes.

This type of engagement is the golden sword for advertisers, but CBS and the other networks are a long way from figuring out how to capture it and turn it into money. Still, CBS Interactive (CBS) has a smart team or tech geeks on the job. This afternoon they wore ties (issued by CBS, joked a media exec), but Smith’s team might be more comfortable in the standard Valley uniform of jeans and tennis shoes. They’re fluent in engineer-speak, having come from pedigree tech companies.

They include Patrick Keane, who spent four and a half years at Google (GOOG) before becoming chief marketing officer at CBS interactive, and David Botkin, in charge of research and audience analytics, who came from eBay (EBAY). “We have little to no experience on the content creation side, but we have a ton of experience in terms of building online experiences around content,” said former Yahoo Anthony Soohoo, who manages the entertainment communities and social media and came to CBS when Smith acquired the company he founded, Dotspotter, last October.

Their innovation strategy is very Web 2.0: rather than launching redesigns, they release new products and tweak existing elements of their online programming in a constant beta. For the past two-and-half months, they’ve been adding social networking features to the site. Soohoo gave a sneak peak of the features to be rolled out in the next six months. They include a watch list of programs viewers follow, a profile photo, opportunities for live chat, and video recommendations. “We’re trying to enable the conversations to happen naturally without forcing users to think about the technology,” said Soohoo.

Smith knows most of the audience won’t be watching these programs on cbs.com, but on other sites like Youtube.com. That’s why the company has put so much emphasis on building partnerships with networks from AOL (TWX) to Bebo to Facebook. They’ve opened an office in Silicon Valley and Smith says they get as many as 20 inquiries a day from sites that want to partner with them. So far they have 191 partners with 148 in queue.

These partners reveal an opportunity for CBS to grow its international business. Right now, 90% of CBS business is domestic, says Quincy. But among the online audience partners, 70% of viewers are international.

But in these partnerships, Smith is not losing sight of what he sees as CBS’s most important asset. “The player is key…it’s really important,” he says of the high-quality video player that displays clips from new programs like Jericho, but also a deep archive of shows like “Twilight Zone” and “Star Trek.”

There’s incredible demand from advertisers, who are, in some cases, pay more right now to advertise against online content then against the shows on television. They are paying as much as $20 per thousand viewers.

Keane mapped out four ad models the site is experimenting with: they’ve launched “skins,” or graphic frames that users can pull on to their profiles, and they have the ability to embed widgets with brand advertisements. They also offer brief ads before videos start and mid-video in longer programs. And they’re experimenting with ads that display atop content while it is playing.

They’re also sifting through data to identify connections in peoples’ consumption patterns online and on the Web. The average age of the CBS primetime television viewer is 53; the online viewer is 38.

True cross-platform programming continues to be a goal not yet fully achieved by the network – or anyone else. Someone brought up the low audience rating logged by Quarterlife, a show that originated on the Web and was then launched on TV. Smith’s brow furrowed as he made a point that underscores much of CBS’s strategy: developing interactive programming for the Web is not about migrating shows to tv, he pointed out. It’s about designing smart programming for a new type of medium.

Which brings us back to Moblogic.tv. Like its popular predecessor Wallstrip, it will only be found online. It’s cheap to produce – less than $2,500 an episode on average. And Wallstrip has a dedicated audience of about 750,000 viewers a month. Tune in tomorrow to see just what it’s all about.

By Josh Quittner 

Want to learn how to make your own sushi? Or how to make an origami bird? Or how to dance without embarrassing yourself? Starting today, Howcast, a New York City-based startup founded by three ex-Googlers, will show you.

The site aims to be a kind of Wikipedia of user-generated videos for people who want to learn how to do just about anything. “We’ll show you how to chop an onion, how to swaddle a baby, how to flirt with a girl,” CEO Jason Liebman told me yesterday. “It’s kind of endless.”

That’s the goal anyway. The trick of this venture will be getting users to step up and make the kind of high-quality videos that will attract an audience. That’s a high bar. YouTube (GOOG) succeeded in large part because its founders made the act of uploading videos about as simple as possible.

But garbage in, garbage out. YouTube is having a hard time monetizing its vast library, partly because the content is so bottom-of-the-barrel. If Howcast succeeds, we’re talking about a $1 billion-plus venture here. Why? Because instructional videos, especially those made with decent production values, will fetch much higher rates from advertisers than the junk that predominate on YouTube.

To that end, Howcast offers a video director’s kit, complete with the elements — opening and closing credits, overlays, and so on — that any aspiring Quentin Tarantino will need to create a top-notch how-to video. Daniel Blackman, another co-founder (and an old pal I first met back in the late 1990s, when he was managing Barnes & Nobles’s online store) told me that the startup is working with film students — and will pay them to produce content. “You apply to our program and if you’re accepted, we’ll pay $50 a pop for videos,” he said. Plus, students in the program stand to get a revenue 50% share on pageviews above 40,000 views.

For now, Howcast has been seeded with a few thousand videos, mainly produced by Howcast and its partners, Blackman said.

Howcast’s video player is worth noting: Very cool. When you watch a video in full screen, a series of written steps appears in the right margin as hypertext. Click on, say, Step Five of How To Fake Being Sick, and you can go right to the disquisition on How to Make Fake Vomit. Pretty sweet. Likewise, you can easily zoom in on anything to study it closer.

Aside from videos, the site intends to amass user-generated, how-to wikis. Indeed, the path to creating a specific video starts with a how-to wiki, which becomes a step by step guide that a director can later use as a script.

The company has a list of partners who will be distributing its videos, including Verizon Wireless (VZ) and a Howcast channel on YouTube. Revenue now comes from sponsorships from the likes of JetBlue (JBLU), and Starcom USA. Liebman also told me that Tudor Investment Corp. kicked in $8 million in first-round funding to build out the staff and content library.

By Josh Quittner

Hayden Black was thrilled—initially—to see traffic start to spike as his online-only sitcom, “Goodnight, Burbank,” found a fan base on Facebook. Then, he tells me, not so much: “Many people erroneously think that the success of your show is determined by how many people go to your website. But watching video on the Internet is an animal in and of itself.”

The problem was that Facebook fans like to stay put on Facebook. Instead of going to blip.tv — the video site that hosts “Goodnight Burbank” and sells ads on its behalf — Facebookers used video-viewing applets to stream the show back to the social network. That may have been good for the series’s popularity, but generated exactly zero income for Black.

So with his latest venture, “Abigail’s X-Rated Teenage Diary” Black built his own social network around his video content. It launched earlier this week. Or rather, he used Ning, the white-label service that lets anyone create a social network. “How do we bring people in? How do we fight the challenge of getting them to leave Facebook for a moment?” Black asks. “I think the best way is to use what Ning is doing — a social network in a box.”

A number of online TV companies are doing the same thing.  Social networks on Ning support, or will soon support, video programs like NextNewNetworks’ “Epic-Fu” and Channel Frederator; the Animation Social Network; Jason Calcanis’s “Maholo Daily” and the popular video podcast “TikiBar.”

This makes a lot of sense to me. We live in a media world; we are awash in the stuff. We define ourselves by the media we choose to consume — that’s partly why people prominently display the books they’ve read. We carry around like flags the magazines we love, and buy “The Sopranos” on DVD because we want to physically possess it. It’s actually kind of shocking that HBO never thought to start a Soprano’s social network.

Of course, none of this is lost on the hungry folks navigating the edges of new media.

Some bigger sites, such as Funny Or Die, are even building out their own in-house social networks. Mark Kvamme, the VC from Sequoia Ventures, which funded the Will Ferrell-backed comedy video site, says that funnyordie.com uses the same platform technology as sister sites mybluecollar.com and skateboard king Tony Hawk’s shredordie.com. Kvamme calls this the “Or Die Network” and says that it will be launching three to five new celebrity-affiliated video sites over the next six months. “We’re building a platform to partner with creative folks to give them best-of-breed web technologies to help them communicate,” he tells me. “We’re baking in our own social networking features.”

Kvamme says that building a social network around a video site is a no-brainer from a viewer standpoint.  “These audiences want to connect and communicate. They want information. We have thousands of people on the newsfeed looking for new videos coming out.”

While Funnyordie had 3.5 million unique visitors in November, Kvamme says it’s yet to turn a profit. “We haven’t figured out how to monetize Internet video yet.”  But social networks, which can demonstrate to advertisers user engagement, among other things, could solve the problem. Kvamme predicts that within five years, “Internet advertising will surpass broadcast television.”

Jeff Macpherson and Tosca Musk live in Vancouver and produce “TikiBar,” an online series about cocktails and the bachelor life. They started their video podcast nearly three years ago as a hobby, and it quickly ramped up into a real business. Currently, each episode is downloaded around 500,000 times a month.

A social network, says Musk, “allows us to really communicate with the audience. Fan scripts and art and music would be e-mailed to us all the time, and very little of it was used. It just sat there doing nothing.” With the launch of the TikiBar network on Ning (still in beta), however, fans can create their own pages and share all that stuff. “Forums are a kind of limited way of expressing oneself,” says Macpherson. “They’re limited to straight, linear text. The social network is a less linear experience — it doesn’t feel like you’re looking at a database of messages. You have your own page, music, photos, documents, and even sets of icons the user creates. It really feels like it comes to life.”