Viacom and YouTube
Old media sue
Mar 14th 2007 | SAN FRANCISCO
From Economist.com
As a continuation of negotiations by other means
ACCORDING to Viacom, an “old-media” giant, YouTube is not only a phenomenally popular video-sharing website but also a scrounger that “has built a lucrative business out of exploiting the devotion of fans to others’ creative works in order to enrich itself and its corporate parent Google.” With these words, Viacom announced this week that it was suing Google and YouTube for infringing on Viacom’s copyright. Google, a “new-media” giant that is also the world’s favourite web-search engine, wasted no time in responding that YouTube is great both for users and for rights holders.
The spectacle that every analyst and lawyer predicted five months ago, when Google bought YouTube, has thus at last begun. Old and new media are engaging in a food fight large enough—Viacom is seeking billion in damages, or 60% of the price that Google paid for YouTube—to get attention. language=JavaScript type=text/javascript> language=JavaScript type=text/javascript> language=JavaScript1.1 src="http://ad.doubleclick.net/adj/daily.economist.com/dailyart;abr=!webtv;sect=news;pos=v5_art350x300;sz=350x300;tile=1;ord=5574401887342151?" type=text/javascript> src="http://m1.2mdn.net/879366/flashwrite_1_2.js"> language=VBScript> dcmaxversion = 9 dcminversion = 7 Do On Error Resume Next plugin = (IsObject(CreateObject("ShockwaveFlash.ShockwaveFlash." & dcmaxversion & ""))) If plugin = true Then Exit Do dcmaxversion = dcmaxversion - 1 Loop While dcmaxversion >= dcminversion
The legal situation is ambiguous. At issue is America’s Digital Millennium Copyright Act which became law in 1998, when Google, founded that year, was unknown and YouTube did not exist. It includes a “safe-harbour” provision for anybody who removes copyrighted content as soon as the owner requests it. YouTube has been doing that—most notably a month ago, when Viacom demanded that 100,000 clips, including perennial favourites such as Jon Stewart’s Daily Show, be taken down. But the safe-harbour clause only applies as long as a site does not benefit from infringement financially. Moreover, Viacom complains, YouTube uses the clause as a fig leaf, since the copyrighted clips that are taken down tend to be back up on YouTube within minutes, as other users keep uploading them. Viacom thus has to dedicate a full-time team just to policing YouTube, a cost that ought to be borne by YouTube, not rights owners. All told, Viacom alleges, 160,000 of its clips have been illegally watched 1.5 billion times on YouTube.
On the other hand, Google’s response is a subtly effective dig at Viacom’s own failings. Why are Viacom’s clips so popular on YouTube to begin with? Because Viacom itself does not make them available on its own sites with the same ease and thus, in Google’s words, utterly fails “to interact with users, to promote [its] content to a young and growing audience, and to tap into the online advertising market.” Because Viacom is a dinosaur, in short.
But YouTube also looks bad. Ostensibly, it owes its stunning rise over the past year to the popularity of “user-generated content”—home videos that amateurs upload for fun, thus creating a new social phenomenon. There are indeed plenty of those on YouTube. But advertisers seem unable to make any use of clips featuring, say, dogs on skateboards or teenagers trading expletives. So what paltry revenues YouTube does have—about m last year, according to Robert Peck at Bear Stearns, a bank—come from old-fashioned, professionally produced content. This is why Google and YouTube have recently struck deals with such media companies as CBS and the BBC. Others, such as NBC and Viacom, have been holding out.
For YouTube’s parent, Google, the suit, even if expected, is a particular headache. It means that Google now faces legal challenges on three major fronts. It is already facing lawsuits against its project to digitise books so that relevant passages can be included in its search results, even without the explicit consent of publishers; and against its display of copyrighted news articles on Google News, where Google suffered an initial defeat in a Belgian court last month. Now the fight extends to video.
In some cases it may behoove Google to take these suits to trial in order to clarify a principle. For instance, Google can reasonably argue that its book-scanning project, as a better card catalogue, only helps publishers and authors. But in the case of video clips, the suit ultimately appears to be a tactic by Viacom to get better terms in a deal that both sides need. This war, to paraphrase Carl von Clausewitz, is only the continuation of negotiations by other means.
