Clash of the Titans

Timing is everything, and my timing is notoriously off. Last week I wrote a whole article praising, telling people how to link to, among other things, clips from various Adult Swim programs.

Too late to rewrite the story, word comes down that Viacom — the parent network of Comedy Central, BET, Spike TV, The N, TV Land, Nickelodeon, MTV, MTV2, and other properties — was suing Google, owner of YouTube, for a ball-busting, record setting $1 billion. Viacom is alleging that YouTube allowed copyright violations to take place through its web portal, as viewers posted clips, and sometimes whole programs, from Viacom on the free video sharing network.

Google’s ownership of YouTube only goes back to last fall, although they acquired legal culpability in the process. Seeing Google’s deep pockets — an estimated company value of well over $30 billion, including cash reserves topping $10 billion — Viacom no doubt saw an easy way to enhance profits (which are falling for most cable networks), recoup (imaginary) losses as a result of YouTube, and discourage other video services from directly or indirectly infringing on their copyrights. Because of Google’s value and cash reserves, Viacom knew they stood a good chance of winning the entire amount in court, or settling out of court for a good size chunk of it.

The filed complaint is worded as strongly as can be, and will be hard for Google to refute: “YouTube has harnessed technology to willfully infringe copyrights on a huge scale… reducing the incentives of America’s creative industries, and profiting from the illegal conduct of others as well.”

It won’t be very hard for Viacom to prove that their shows are being viewed on YouTube, and by millions of visitors. What will be harder to prove is Google’s culpability in all this.

First of all, there’s no indication that YouTube is profiting in any way, shape or form from hosting any videos, Viacom’s included.

Secondly, Google could probably argue that their service has actually benefited Viacom, increasing awareness and popularity of their shows. Lastly, Google has been in (so far unsuccessful) negotiations with media companies to legitimize and commercialize YouTube, and has made efforts to curtail the sharing of copyrighted content. They could argue that they just needed a little more time to get into compliance, and that Viacom’s suit — against YouTube, not Google — jumped the gun.

In a sense, both companies have valid points that underlie the bigger issue. The truth is that networks have been horrendously slow to respond and adapt to the shift in technology and new emphasis on online content, and have shown a distinct lack of creativity in playing catch-up. They seem hopelessly attached to dying business models, and are willfully passing up a golden opportunity to reach more people than ever before.

Studies have shown that people are more than willing to watch commercials, but want more flexibility as to when, where and how they watch their televisions shows. In that way the networks are failing their advertisers as well as their customers.

Some networks have caught on, and offer downloads and clips from their most popular shows with the commercials intact, on proprietary viewers that don’t allow people to fast forward. The iTunes Music and Video store now offers dozens of shows for nominal fees, starting at around $2, and has millions of happy customers. Viacom itself has the MotherLoad service to broadcast clips of their shows, although it doesn’t work very well.

On the other hand, Google should have known better. Although there’s a certain benefit to getting in first, and being number one, Google basically painted a huge target on their corporate headquarters when they bought YouTube. I also doubt Viacom will be the last company to sue Google over copyright, and that other networks are watching closely to see whether the suit passes the first legal tests. Microsoft is also threatening suit over Google’s efforts to digitize millions of books.

Sometimes you have to go to court to make your point or force an issue, but the level of exposure is huge for Google. They’ve already invested $1.65 billion in YouTube, which they now have to defend to the bitter end. A defanged, copyright-free YouTube is probably worthless.

At a higher level, this suit is also about more than Viacom and Google, given the precedent it could create.

For Viacom and the television industry, it represents an opportunity to assert some control over the Internet, and establish themselves as the dominant player in new media.

For Google, the suit represents an opportunity to reassert the validity of consumer-driven media, as well as the ascendancy of the Internet over other media. By their logic, companies like Viacom are stifling innovation, which is the lifeblood of the economy and society as a whole.

Given what’s at stake, it would almost be a shame if this issue were settled out of court.


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