The Real Skinny on the YouTube Dealposted by MR WAVETHEORY at 11/02/2006 10:02:00 AM
I have to give the folks there brownie points for being very creative on the structuring. YouTube was going to set aside $500 million for copyright infringement claims but instead it offered the big media companies each an equity stake of $50 million each so that they would have a cease fire for 6 months in which big media like Viacom Inc. (NYSE VIA), Warner Music Group Corp (NYSE WMG), and Universal would not sue. $50 million that was immediately worth a lot more in the hours after the deal was announced with Google Inc. (Nasdaq GOOG).
> The first request was a simple one and that was an agreement to look
> the other way for the next 6 months or so while copyright infringement
> continues to flourish. This standstill is cloaked in language about
> building tools to help manage the content and track royalties, some of
> which is true but also G knows that every day they can operate in the
> shadows of copyright law is another day that Youtube can grow. It
> should be noted that Google video is a capable Youtube competitor with
> the ONE big difference being a much more sincere effort to not post
> unauthorized works - and Google fully appreciates what a difference
> that makes. So you can continue to find movie clips, tv show segments
> and just about every music video on Youtube today.
> The second request was to pile some lawsuits on competitors to slow
> them down and lock in Youtube's position. As Google looked at it they
> bought a 6 month exclusive on widespread video copyright infringement.
> Universal obliged and sued two capable Youtube clones Bolt and
> Grouper. This has several effects. First, it puts enormous pressure on
> all the other video sites to clamp down on the laissez-faire content
> posting that is prevalent. If Google is agreeing to remove
> unauthorized content they want the rest of the industry doing the same
> thing. Secondly it shuts off the flow of venture capital investments
> into video firms. Without capital these firms can't build the data
> centers and pay for the bandwidth required for these upside down
What is interesting about the post is the last tidbit:
> Infringement lawsuits will be served on Youtube and the new proud
> parent Google in the coming months. Google will respond with two
> paths: an expensive legal fight or a quick and easy settlement with
> most choosing the latter. Are there any larger copyright holders such
> as music publishers, movie studios, or unlicensed record label EMI
> that put up a fight rather than accepting the check? We'll have to
> watch and find out.
Read the full post: Some Intimate Details of the YouTube Deal