Unprofitable IPOs Are Back, But Is That A Bad Thing?

Viacom Chooses The Nuclear Option For YouTube

from the dr-evil-setting-the-demands dept

Tue, Mar 13th 2007 7:23am — Carlo Longino

Last month, after failed negotiations, Viacom ordered YouTube to remove more than 100,000 clips containing Viacom content from its site, and said it would launch its own video site with a bunch of copycat features (usability not being one of them). Apparently Viacom's figured out that paying for all that bandwidth might get expensive, as it's now sued YouTube and Google for $1 billion, and it's seeking an injunction against the site. Viacom contends YouTube's business model is "illegal" and that it's intentionally infringed the company's copyright, saying that more than 160,000 unauthorized clips have been available on YouTube, and viewed more than 1.5 billion times. The suit illustrates Viacom's misunderstanding of the web and YouTube: its claim for $1 billion essentially says that's the amount of money it thinks it's missed out on because of YouTube (just to put it in perspective, Viacom's 2006 revenues were $11.5 billion). That's pretty ridiculous, and should Viacom's own video site ever become popular enough to deliver similar viewer stats, the revenues it generates will underline that. What's more likely to damage Viacom's business is removing the clips from YouTube, since it offers a free promotional outlet -- something other broadcasters have noticed -- that may not directly generate revenue for the company, but indirectly drives viewers to its revenue-generating products. Update: Over at NewTeeVee, Liz Gannes takes a look at the numbers, while on IP Democracy, Cynthia Brumfield has examined the suit and calls it "fluffy", noting it never even cites the DMCA, which one would imagine would be particularly relevant here.

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38 Comments

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a, 13 Mar 2007 @ 7:54am

Carlo, the one billion dollar figure isn't about how much Viacom lost, its about YouTube breaking the law.

It may seem like a slam dunk for Google, but consider what Google has said in the past:

"YouTube, owned by Google Inc., plans to introduce technology to help media companies identify pirated videos uploaded by users. But the tools are currently being offered as part of broader negotiations on licensing deals, they said."

So they could have stopped piracy, but only if you work with them. This could be bad for Google. Part of the free harbor status Google is saved by requires that the platform does not knowingly allow piracy. Seems to me that technology that does this removes the safe harbor.
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- Paul, 13 Mar 2007 @ 9:03am
  
  Re: a
  You can't sue them for more money because they're breaking the law. You aren't allowed to get reimbursed for finding somebody breaking the law. You can only sue for damages and related items like that.
  
  Beyond that, those tools that Google offers may cost an extra amount of money or effort that causes they're system to become less efficient. They may not be able to afford to run it continuously, hence only offering it when licensing and negotiating which probably allows them to cover the cost.
  
  Also, they probably need to tailor the tools to those copyright holders. That could be a cost in itself as well. Then if they offered it for free to Viacom, everybody else who has any copyrighted material will sue if they find their stuff up on the web, no matter how small they are.
  
  Its not an effective approach and I hope the court will see these points. Its not a matter that they could stop it, but didn't. So, just like you said, they could stop piracy, but only if you work with them. That last part stipulation may actually be a requirement that Google couldn't get rid of even if they wanted to.
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Sanguine Dream, 13 Mar 2007 @ 8:12am

I'm not so sure...
While Viacom may have a plausible case it sounds like they are just suing in order to fund their own site. Long gone are the days of suing in order to get someone to stop doing something that may or may not be illegal. These days lawsuits have become a source of income.
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- I never thought I'd see the day, 13 Mar 2007 @ 9:44am
  
  Re: I'm not so sure...
  Sanguine Dream makes a comment that doesn't bring in some pointless anti-religious statements... Gotta put that one in the books.
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  - Sanguine Dream, 13 Mar 2007 @ 11:34am
    
    Re: Re: I'm not so sure...
    ???
    
    I've been on an anti-big business tear the last several weeks (and with good reason) but I don't recall going on any anti-religious rants. Refresh my memory please?
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Norm, 13 Mar 2007 @ 8:31am

Sue or lose your rights?
Could a knowledgeable person answer this question?

I have been told by a lawyer that a copyright or patent holder that did not sue infringers, effectively loses the ability to sue a later infringer as the later infringer could defend themselves by saying that the earlier non defense by the owner showed that they did not really care about the property.

If this is true, then all this talk about whether it is good to allow one infringement (for advertising) or another is pointless as you either must sue or lose your rights.
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- David Roberts, 13 Mar 2007 @ 8:40am
  
  Re: Sue or lose your rights?
  You are missing the other option, an agreement to allow certain content to be used on Youtube which would maintain Viacom's control over the copyright but also give both the benefits of the free promotion - win/win. There is a strong element of greed in this and similar actions there no matter how you look at it.
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- Thomason, 13 Mar 2007 @ 8:49am
  
  Re: Sue or lose your rights?
  Loss of the right to sue can occur if you give the infringer reason to believe that you will not sue them, AND the infringer relies to their detriment on that. Even so, if the statute of limitations has not run, then you may still be able to sue them.
  The example is seeing an infringement, and telling the infringer - we could sue, but we've decided it's not worth it - and the infringer borrows millions to expand, hires new employees, etc., in reliance on that statement. That suit could, and only could, be barred. If, however, before the stat/lim runs out, you see the expanded nature of the infringement, and decide, it's worth it to sue, then the claim may not be barred entirely.
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- harknell, 13 Mar 2007 @ 9:31am
  
  Re: Sue or lose your rights?
  Copyright rights are never lost during the timeframe that you own them. Trademark though is a right that you must defend or lose. (trademark is actually really a fraud prevention method--the "mark" allows your customers to know that they are buying a legitimate product from you, if someone else uses your trademark they may be defrauding someone by selling them something that the customer thinks is from you--thats why it has to be defended or lost)
  
  Copyright is simply the "right to copy", you have the right to dictate who can make or sell copies of your work. You can't lose that right unless you assign it to someone else, or the copyright timeframe lapses. What can happen is that if someone copies your work, and you know that it is happening, the copier, if sued by you, can say they were not "knowingly infringing" since they assumed that since you knew and did nothing it was ok for them to copy your work--however, that does not allow them to continue though if you tell them to stop, it only means that up to that point they can't be hit as a "knowing infringer" for a large amount of $$$, the amount for unknowing infringement is much smaller if anything at all. Fan sites and other such uses of copyright material does not mean the original loses all ability to force them to take stuff down, essentially they are copying at the leisure of the owner, but can be stopped at any point.
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  - Norm, 13 Mar 2007 @ 9:56am
    
    Re: Re: Sue or lose your rights?
    One more question.
    
    All broadcast TV has copyright notices that say that use without permission is prohibited.
    
    I assume this means that an infringer that posts such content to YouTube has been "informed" that they cannot do this. This means that if sued, the infringer cannot claim that they unknowingly infringed. If however the owner does not challenge the posting, and in fact allows the knowing violation of the terms of use of their copyrighted material, could this reduce their ability to enforce their copyright in the future?
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    - Anonymous Coward, 13 Mar 2007 @ 10:33am
      
      Re: Re: Re: Sue or lose your rights?
      Failure to enforce a copyright does not, in itself, reduce the copyright holder's rights. There are lots and lots of grey areas here.
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Chris, 13 Mar 2007 @ 8:37am

We'll see who the judge is.
I don't really see how Viacom can sue Google after they already removed their content. They were issued a cease and desist by Viacom to pull all of their content and Google did so to the best of their ability. If Viacom sued outright in the first place they might have a better case to present. I'm by no means an expert on the laws involved with this case, but consider Google's track record when it comes to these types of things, and it would seem they don't have much to worry about. If Viacom is seriously hoping to get $1billion dollars from this suit they better have a very convincing argument that the content that was displayed would have generated that much in licensing fees, not possible revenue that might have been generated.
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69, 13 Mar 2007 @ 8:40am

i think u mean scorched earth option
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Shohat, 13 Mar 2007 @ 8:55am

It is actually the only logical action
The actually DO own the material, Youtube IS making money off it, and it's better solve this now than later.
They are making the only move that makes sense.
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DCX2, 13 Mar 2007 @ 9:02am

re: a
In regards to Google not offering the filtering services to non-partners, they have said that the technology is not mature.

Of course, I'm sure Viacom doesn't give a rats ass if non-infringing videos are removed in the dragnet of filtering software. But Google and whoever is uploading into this dragnet will care.

Remember, in Viacom's cease and desist letters, a lot of non-infringing content was removed because it looked like Viacom content, but wasn't. Did they care? No!
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Overcast, 13 Mar 2007 @ 9:04am

Viacom should be held liable - under fraud law for each and every item they claim is theirs - but is not.

Isn't that copyright infringement in itself?

I suspect if I claim some Viacom show is actually 'mine' - they would sue.

So - post crap that looks like it's from Viacom - let them take it down by court order and sue for fraud.
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Norm, 13 Mar 2007 @ 9:07am

Re: Sue or lose your rights?
I am not missing the option to make an agreement, but one has to be very careful. Once you have given away your rights it is difficult to get them back if the situation changes.

For example, what happens when the video quality on YouTube improves to be similar to a TV so people truly do watch shows on YouTube? If your rights are gone, they are are gone and so is your business.

I am not trying to take Viacom's position. I am just pointing out that in today's very legalistic society, your actions are many times not determined by what is "right" but by what make legal sense.

Also I thought that I have read elsewhere than Viacom has been in negotiations with YouTube but that these have gone nowhere.
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a, 13 Mar 2007 @ 9:09am

Some people have drank the kool-aid.

Viacom ordered YouTube to remove its content. Google is the one who pulled non-viacom content down, not Viacom.

Viacom has every right to have their content pulled. Its their decision. Would it cost Youtube money to make sure Viacom's content isn't posted? Of course, should that matter to Viacom? No.
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Aaron, 13 Mar 2007 @ 9:37am

Stupid, stupid, stupid.
Wasn't Viacom (actually CBS, but same thing) one of the first media companies to come out in support of internet video, realizing the benefits (and inevitability) of making your shows available in whatever format the viewers want? They were the first, IIRC, to make their shows available on their own website, with their "Innertube" service.

Certainly, they want to capture the viewers on their own site, with their own ads, but there's the pesky little issue of fair use. Quoting newspapers/magazines/books in the context of a larger discussion about the content is so well established that nobody even talks about it any more. Youtube (and other video sites) are much more than just a huge catalog of videos. There is a discussion about those clips.

If there are any complete episodes, I can see why that would be a problem (I doubt there's 100,000 though), but short clips and single scenes so clearly fall under fair use, it makes you winder where these lawyers got their degrees.
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Chris, 13 Mar 2007 @ 10:21am

Anti-intuitive
All the work that goes into putting together a news broadcast, the interviews, the sound bytes, the digital recordings, etc... are the property of the parent company producing them. Once they go out over the airwaves however it becomes public domain. Other news companies can use their clips, quote their reports, and quite generaly pick and pull any clip they want to use as they see fit. This is allowed becuase it's a collaborative effort to help get a story exposure. Granted the news today isn't worth anyone's time, but the idea is to give credit where credit is due and use other's content to help expanded the "consumer" base.

What Viacom needs to acknowledge is that it's just plain stupid to not allow services such as YouTube to host their content. The only thing you're going to do is present yourself as being a greedy corporation to your demographic. Let's face it, the majority of viewers for MTV and Comedy Central aren't going to support your decisions when you restrict them from freely access your shows. They WANT to see them, so allow them to do so at their convenience. You get free advertising, don't have to pay for the bandwidth, and with the added exposure might even get more viewers when new shows come on, all the while still retaining your rights to your media. Allowing YouTube to have your content = winwin. Suing them is just going to get you bad PR amongst your demographic.
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- Anonymous Coward, 13 Mar 2007 @ 10:45am
  
  Re: Anti-intuitive
  "Once they go out over the airwaves however it becomes public domain."
  
  This is absolutely not true. The copyright owner retains all rights to the actual broadcast.
  
  Other broadcasters/publishers can report the facts contained in the broadcast but can not use the actual broadcast in whole or part without permission and/or prior licensing agreements.
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Overcast, 13 Mar 2007 @ 10:52am

the majority of viewers for MTV and Comedy Central aren't going to support your decisions when you restrict them from freely access your shows. They WANT to see them, so allow them to do so at their convenience.

Good point - I haven't watched Saturday Night Live in years.... very long time.

I did a few days ago just because some of the funny clips I seen on the web kinda enticed me to.

But they can take their stuff down, I could careless.
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a, 13 Mar 2007 @ 10:52am

So on how many fronts is Google being sued? Lets see, Viacom, the book people, the Belgium newspapers. Damm, they are getting hit on all fronts. And to think they thought Click Fraud was bad.

If I owned their stock, I would be concerned.
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Overcast, 13 Mar 2007 @ 10:58am

Viacom has every right to have their content pulled. Its their decision. Would it cost Youtube money to make sure Viacom's content isn't posted? Of course, should that matter to Viacom? No.

True - but.. Viacom should do the leg work to prove what is theirs and what's not theirs, if it's such an issue for them and then point the finger.

Google shouldn't be required to police it all and make a determination. It's not expected for a library to monitor their photocopier for illegal activity, nor is it the job of Wal-Mart to be sure none of it's cooking knives being sold aren't going to be used in the commission of a criminal act.

YouTube is more or less just a public 'market' of videos. Does a flea market's management have to make 100% sure that every pair of socks being sold at the flea market isn't a name brand fraud made in some third world country? No... that falls on the person selling the actual sock.

These big media companies are the biggest babies, crying and whining like 3 year olds who have been deprived of their ice cream.

Comedy Central should be happy there's even an interest in some of their shows. So much of it's worn and beaten. Truth be told, I still won't watch Saturday night Live, it's not the same as it used to be. And no.... I'm not going to buy the DVD's - content on YouTube or not. Hell, the only reason they even came to mind was seeing some of the clips on YouTube, otherwise - in my mind, they are long past their hayday.
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Anonymous Coward, 13 Mar 2007 @ 11:04am

Sadly, I just deleted Comedy Central from my PVR. Good bye John Stewart, you will be missed.

I'll put it back when Viacom drops this lawsuit and acknowledges that YouTube did them more good than harm.
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Greg Andrew, 13 Mar 2007 @ 12:44pm

This is lawsuit as negotiating tactic. Viacom realizes that if it doesn't make a deal with Google, they are going to be stuck in an endless race to order takedowns of content. They want a deal with YouTube, but they want a deal where Google pays them a lot more money than they've been offering. So they file a lawsuit as a means to pressure Google into a deal more to Viacom's liking.
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a, 13 Mar 2007 @ 1:14pm

This may hurt Google a whole lot more than Viacom. If Viacom wins, how many companies will line up to sue Google? (course, quite a few have already done so)

Content is king, good content will generate profits, no matter who is distributing it.

How can a company that does no evil end up in court so much?
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Iron Chef, 13 Mar 2007 @ 1:19pm

Raging Mad
This is just another example of how business models of aging companies believe their intellectual property is worth more than it actually is.

If you fail to innovate, you're willing to sue over IP to make your balance sheet look good to your investors.

This bullls**t needs to stop or else we're going to have a societal meltdown where people will be afraid to innovate, and everything will be just like this ad from the past.

http://www.youtube.com/watch?v=-KNrxwl59I0
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a, 13 Mar 2007 @ 1:34pm

Iron Chef
Who cares what Viacom believes? They can value their content any way they choose. What right does Google have to profit off of Viacom?

It isn't difficult or innovative to be able to profit off of others work. That is generally called theft.
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Leo Laporte, 13 Mar 2007 @ 2:02pm

Viacom's motives.
It will be interesting to see if Viacom falls short of wallstreet estimates next quarter. They could be ramping up for a dissappointing quarter. You have to admit, $1.4B is an absolutely abnormally large number.

I think that a good point was made in an earlier post-- When you consider that a speeding ticket is issued to correct a negative behaviour (speeding) it doesn't cost nearly what it costs to defend against copyright infringement, be it a lawsuit against a individual or a corporation.
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Don McAllister, 13 Mar 2007 @ 2:14pm

Viacom's CEO settled lawsuit with son.
If the CEO of Viacom sued his son, it speaks to his character.

Apparently ending an embarrassing family feud, Sumner Redstone, whose National Amusements company controls Viacom and CBS, has settled a lawsuit filed by his son Brent.

In the lawsuit, filed one year ago, the younger Redstone had claimed that his father and sister Shari had frozen him out of the decision-making process at National Amusements, in which Brent, like Shari, holds a one-sixth interest. The stakes were placed in a trust that Brent and Shari could not access.

At the time the suit was filed, National issued a statement saying that it was "unfortunate that Brent Redstone is abusing the court system in an attempt to extract a financial settlement in a family dispute." Word of the settlement, which first appeared on the Wall Street Journal's website on Sunday, contained few details.
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- a, 13 Mar 2007 @ 2:17pm
  
  Re: Viacom's CEO settled lawsuit with son.
  Uhhh, Don, the son filed the lawsuit, not Sumner. Nice try though.
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Robert McLaws, 13 Mar 2007 @ 2:29pm

Is scaremongering really necessary?
I don't care how big the lawsuit is, the phrase "nuclear option" shouldn't be used in that context. In fact, it shouldn't be used in any context other than dealing with actual nuclear weapons. We have enough fear running rampant in our society without people demoting seriously bad events by using them in everyday conversations.
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about, 13 Mar 2007 @ 2:31pm

Robert
Would "Global Warming" option have been better? What do we now call our nuclear power plants? Is my family no longer able to stay together?

Lighten up Francis.
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Anonymous Coward, 13 Mar 2007 @ 4:30pm

Youtube IS making money off it,

And what if the income == the bandwidth expenses?
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|333173|3|_||3, 14 Mar 2007 @ 7:23am

google has enough money to fight off the Book companies, win, adn claim for court costs. Hte belgian newspapers will keep going for years, round and round in circles, until either the EU runs out of money to pay for higher courts for one side or the other to appeal in.
Viacom may win, but Google will probalby force them to settle for much less.

If I were running YT's takedown section, i would make a PDF of a form which has to be printed, filled in maulally (DRM to prevent you typing, and use the DMCA in the USA to prevent you breaking it), and faxed to google. if everything OCRs correctly, you get sent a confirmation email, and when you send a reply to the correct address with the right info (from the form, so a script cannot reply), the file gets taken down. THis make sit such a pain to get a page removed that only those hwo think it worthwhile will do so.

IRT 5: scorched earth is where you destroy everything behind you as you retreat, so that an advancing enemy army has to bring its supplies with it. A famous example of a highly successful application of a scorched earth strategy was when Wellington was retreating to Torres Vedras, forcing the french to transport supplies hundreds of miles accros hostile territory.
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