YouTube: an illegal business model?
More than $1 billion in damages and an injunction prohibiting Google from further copyright infringement: that is what Viacom seeks. Tuesday, March 13th, Viacom finally filed a lawsuit, accusing Google of « massive intentional copyright infringement ». Since it bought YouTube last October, Google has been chasing deals that would give it the right to put mainstream video programming on the site. The tensions between new and old media companies are now visible.
In a press release, Viacom, the parent company of MTV, Comedy Central, Nickelodeon, Paramount and DreamWorks, accuses YouTube of developing a « clearly illegal business model », « exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent Google ». Almost 160,000 unauthorized clips of Viacom would have been available on YouTube and viewed more than 1.5 billion times. In the philosophical and financial battle between media and tech companies, Viacom made a move that could prove to be decisive for the future of on line video distribution.
Google openly express its ambition of becoming the leader of online video, like the Apple's iTunes Store for music. Google plans to combine YouTube's vast audience with its mastery of online advertising technology to create a lucrative business whose revenue it will share with large media companies and other content creators.
YouTube has succeeded in signing licensing deals with content providers, like the BBC, CBS, Fox, NBC Universal, Time Warner and the NBA, that will allow it not only to gain rights to programming, but also to insulate itself from any liability for past copyright violations on YouTube. Thus, some prefer finding a deal because of the strong promotional power of YouTube. However, as the negotiations have dragged on, major media companies have grown increasingly frustrated over the proliferation of copyrighted video on YouTube. Indeed, they have to scour every day the entirety of what is available on the site to look for their content.
Google sees itself as leading a revolution of video consumption and distribution. But from now on Viacom wants to take a fair share of this new market that benefits from the rapid expansion of online advertising. The stakes are high. It is about attracting the new costumers' generation, going where the audience goes.
In legal terms the suit relies on the Digital Millennium Copyright Act (DMCA) of 1998, which made it illegal to deploy technology intended to circumvent legitimate copyrights. But the law included a so-called « safe harbor » provision, which indemnified some kinds of Internet companies if they immediately blocked or removed such content when a copyright holder informed them it was there. The resolution of this lawsuit, if it comes to trial, will hinge on the interpretation of this provision.
Google declares itself to be protected by the DMCA. Viacom is convinced of the contrary. The major claims that unlike internet providers who really have no idea about what is flowing through their channels, Google is an active participant with its users. From one side, it is unclear whether YouTube encourages the people to infringe on copyrights. Google has also always promptly removed the copyrighted content when asked to do so. On the other side, the financial benefit that Google is getting from the business model could rule against it.
This battle is the symptom of a war between old and new media, two different points of view about what is happening on the Internet, and what should happen. One side wants to create software that enables people and companies of all size and importance to communicate and gain power, and the other side wants to retain control of content they have spent a lot of money to create.
Let's take the music industry's example. Innovations first came from software companies, with some mistakes indeed, like Napster. Then, the major media companies reacted after. And if the illegal downloading seems to have lowered, it is less because of lawsuit fear than because of the development of a convenient and affordable way to get music legally.