Viacom filed a $1 billion suit against YouTube back in March 2007.

The original complaint claimed 160,000 unauthorized clips were available on YouTube and those clips had been viewed 1.5 billion times.

This is hardly the end of this battle — Viacom says it’s going to appeal this ruling.

In the three years since the suit was filed YouTube has gone to great lengths to identify all the clips on its site and to monetize those clips for the content owners. While YouTube has gotten a range of media giants on board—from Disney to the Associated Press to CBS, Viacom has remained firm in its opposition.

Excerpted from Julia Boorstin’s article in CNBC’s Media Money. You can read the article in its entirety here.

We’re encouraging television fans from around the world to riff on their favorite TV shows, by submitting videos that creatively interpret shows past and present — and answer that age-old fan question: “What the %&*! did these characters do all summer?”

Here fans can celebrate TV, make great stuff that other fans want to watch and maybe even demonstrate that user generated content and television can happily coexist.

Winners get free cable to make sure they stay on top of next season’s best television.

FanTrust’s “I Know What TV Did This Summer” contest is powered by memelabs, making it easy for us and the fans to upload, view, vote on, and virally distribute UGC videos.

Ninja, of viral video “Ask a Ninja” fame, shares his thoughts on online video audiences, content and monetization below. Enjoy!

It turns out that people become addicted to cult brands for more or less the same reasons that people become committed to cults like the Moonies. And that companies cultivate unshakable allegiance through the same basic techniques as those used by, say, Hare Krishna.

Asks The Culting of Brands: Does this make these companies unethical? Or have they simply found a way to attract and retain customer evangelists through the power of brand messages that say, “being part of my brand is being part of something special.” We all know these brands: Apple, Harley Davidson, Prada. Of course, it helps that their products are good, but is their marketing even better?

Ignoring the all-too-obvious link between Tom Cruise and Scientology, how can entertainment and digital brands capitalize on this approach? How can you use cult-building to your advantage?

Piggyback on existing fan communities:

• Ebay is a cult that latched onto preexisting communities of collectors, co-opting the collectors wherever they congregated

Lurk and listen:

• Lost producers used the web as an online audience focus group and took storylines in new directions and to new levels of complexity because of fan support

Launch and let go:

• Second Life lets users create their own economies and democracies, rewarding both fans and shareholders

Absorb: Absorb competitive ideas into your own organization; co-opt the best ideas out there and make them your own — or just go whole hog and buy the company:

• Youtube is a better Google Video

Cult yourself: Launch your own cult; establish a separate entity with its own theology and devoted followers and invest in it so that it steals share from newcomers:

• American Idol and its franchises
• Facebook triumphs over Friendster

Let the cult find you: Release something that you are passionate about and revel in the results; like-minded people are out there:

• Yahoo Groups and face-blindness

Love bomb: Overwhelmingly celebrate individuals who engage with your productions; give them their 15-minutes of fame:

• Zimmer Twins and on-air UGC

It turns out that all of these approaches are practiced by the best cults. I believe that the accessibility of the Internet makes cult-building that much easier.

• The doors are always open
• The participation is global
• The search engines promote you, and
• The shared passions multiply

Of course, if you don’t want to be your cult’s guru, no worries. Fans will happily anoint one of their own.

According to the Wall Street Journal, “You Tube has spent months testing different ad formats to figure out which models don’t alienate viewers. It found that viewers abandon videos that include pre-roll ads at a rate of more than 70%, so it ditched pre-roll commercials.”

YouTube’s next phase of testing: overlaid advertisements – semi-transparent ads that run on the bottom 20% of the video window. Ads appear 15 seconds into the clip and remain present, unless eliminated by the viewer, for 10 seconds.

If viewers click on these ads, the videos they are watching will pause, and the ad will launch.

YouTube is testing these ad models, and their rev-share terms, with 50 content partners, including Ford Models and Warner Group Corp. The CPM is said to be $20.

Why am I a fan of this latest ad model?

In a word: unobtrusive.

Overlaid ads are common on television – this is not a new promotions model for either viewers or advertisers to wrap their heads around.

Conversely, many advertisers are struggling with the constraints of making a compelling pre-roll commercial. It’s difficult to tell a story, relay a message and convey emotions or humour in a 30-second spot. All the more difficult in 10-15 seconds.

An uncompelling pre-roll commercial can be deadly not only for the advertiser, but also for the content partner.

What online video does best for entertainment brands:

(a) Gets your content in front of newbies, not just loyal fans. Online video is an easy, low-commitment way for a viewer to determine whether they want to park themselves in seats for your premiere.

Case in point: a friend of mine, recently visiting me from NYC, could not stop talking about her favorite new show, “Flight of the Concords”. Rather than download an entire episode or TiVo the show, I went to YouTube and watched an 8-minute clip of the first episode… then I watched the second 8-minute clip … then the third. I’m not yet completely hooked, but I’m willing to watch the second episode – off of YouTube.

(b) Takes your content viral.
Embedded code and “forward to a friend” buttons allow viewers to easily get your content in front of new eyeballs.

Friends don’t send friends pre-roll.

I, for one, have never forwarded content that included a pre-roll ad.

A recipient’s commitment level to viewing a forwarded video is often low. Remember, the recipient did not seek out the content – rather, he or she is watching the video on the recommendation of a friend.

If I don’t know whether I’ll like a video, why would I sit through an advertisement before the video? And why would I post an ad-laden video to my blog, let alone send it to a friend? If the value of the video is unknown, the likelihood of a viewer sitting through a pre-roll ad is low.

Which is why I’m betting on the success of overlaid advertisements – they unobtrusively spread their message without inhibiting either the viewing experience or the viral strength of online video.