Saturday, December 02, 2006

YouTube and the Google boodle

Jon Fine at BusinessWeek reports on the ongoing saga of dealing with copyright issues following the Google-YouTube deal.

From the article:
Google and YouTube are dangling nine-figure sums in front of major programming and network players -- that is, the Time Warners, News Corps, and NBC Universals of the world. Google calls these monies licensing fees, according to executives who've been involved in the discussions.

But some of them characterize the subtext like this: Don't sue us over copyrights. Take this (substantial) payment, and trust us to figure out how we'll all make serious money once we get advertising and revenue sharing worked out.

If you're a network, you can't ignore YouTube's reach ... But if you're a network ... your copyrights, and insisting on your programming's premium value, underpin the entire business model. To complicate matters, no publicly traded media company today is in a position simply to dismiss, say, $100 million. Such a sum far exceeds what any single broadcast network can extract from the online world.
I have to admit, I was surprised lawsuits were not filed immediately after the GooTube deal closed. This appears to explain why. It is not that Google thinks YouTube has no infringing content (as Eric Schmidt absurdly claimed), but that the studios are dazzled by shiny hordes of Google boodle.

It does not seem like a good position for Google. They essentially are saying: We know YouTube is illegal, but here's a huge bribe if you ignore it for now. Those are going to be expensive deals for Google; the studios know all the leverage is on their side.

And, perhaps it is naive of me to think Googlers actually believe in it, but it is hard for me to see how this fits into Google's "do no evil" philosophy. Even if you think current IP laws needs to be changed, pushing that forward by brazenly violating copyright law seems to cede the high ground.

See also my previous post, "YouTube is not Googly". That post originally was written before the deal had been announced, but the updates at the bottom have additional links and comments on Google's efforts to buy off YouTube lawsuits.

See also Om Malik's post where he said, "It is the distraction factor ... The copyright issues and all those other problems are going to strain google where it is weakest - management and control."

[Found via TechDirt]

Update: Two months later, SeekingAlpha reports, "Despite months of negotiations, Google has been unable to secure a deal to post content from any major media company on YouTube."

Update: Three months later, Viacom sues GooTube for $1B. Apparently, the bribes Google offered were not big enough. More from Don Dodge and Mark Cuban.


Anonymous said...

How is it illegal if Google licenses content from the copyright holders thus creating a new revenue opportunity for them that didn't exist a few months ago?

-- Dare

Anonymous said...

This is hardly the first time Google have flouted copyright, it just affects many more people and big businesses than their print facility could achieve.
Besides, didn't Google drop "do no evil" in favour of their "10 things" philosophy?

The more I read over that it reminds me of the Barn Wall in "Animal Farm".

Jeff O'Connor said...

Is it really a bribe, or the first step towards figuring out a viable model for the dissemination of media in the Internet Age that is legal and practical? And if the latter is the case is this a perspective that's shared by all parties concerned?

If not, then I'd be inclined to agree that this is not a good position for Google to be in, but only if the other players see this as payola and not something more substantial.

chad said...

Google can point to the music companies and their bone-headed killing of Napster and basically ask the labels if they want the same fate i.e. hundreds of mini-tubes out of kazakhstan etc., or do they want to keep users in one big gootube site where theres at least a CHANCE of making some money from the content. IMHO, the networks need gootube as much as it needs them. It ain't 99.

Also...clearly google had to do video hosting. distributed content indexing hasn't panned out (yet) versus central hosting.