When NBC Universal asked Youtube to remove SNL’s Lazy Sunday skit, CEO Chad Hurley initially suggested to NBC that maybe it was someone at NBC or SNL who had uploaded the video clips in question. I’m not sure the argument flew with NBC’s lawyers, but it got me thinking: now that copyright owners like record labels and film studios are closing in on Google (who has since acquired Youtube), should Google and YouTube use the argument that:
We’re innocent until proven guilty. In other words, shift the burden of proof onto the copyright holders and make them prove that it was not an employee at a record label studio or film studio who uploaded the clip in question to get free promotion? I know it’s absurd, but what isn’t absurd in litigation?
It’s a strategy that would irritate the studios and labels, but it might work.
Think about it. Who owns the content? The labels and studios. But the labels and studios need to determine which stakeholders deserve a cut of the monies.
Let’s run with that notion.
As it stands now, just because a studio or label deserves credit and compensation does not guarantee that an artist - who effectively created the content but is not guaranteed a cut - would get a cut.
So… YouTube can argue that even if the labels and studios can prove that it was not an employee of theirs who uploaded the material, it might have been the artist in question.
A smart judge would not buy the argument… but I would be curious to know what the law says about all of this.
After all, reasonable doubt and the specter of doubt comes into play here.
My gut, there are more than enough cases of artists, artists’ managers and publicists uploading content onto Youtube to suggest that Google/YouTube’s lawyers can place a seed of doubt in a judge’s mind that the content was in fact uploaded by someone who owns the rights and wants to use the platform for promotional purposes.
If Google/YouTube can create this confusion in the Judge’s eyes, then it could effectively put the entire burden on the labels and studios and not themselves.
Is this crazy?
It might be. But if labels and studios realize that convincing a judge that Youtube is the lone bad guy in the picture is hard, they might reduce their leverage and blood-thirsty stance vis a vis Google/Youtube and the other file sharing players.
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WatchMojo NewsletterIt won’t, but content is real messy. The line I use is “content is king but monarchies tend to get messy,” and if Google lets its sky-high share price get to its head, it might end up falling on its sword.
Indeed, unlike many former high flying dot com stocks, Google generates a lot of money. Google is on pace to earn $1 of every $4 spent in the US this year on advertising. And unlike previous years, the money is not coming from VCs funding and coffers but rather established corporate advertisers, small and medium sized businesses and individuals using its Ad Sense. On this note, it’s fundamental to note that while yes, Google gets 99.9% (it literally does, the 0.1% comes from licensing of its search technology to corporate clients), the client base is spread out amongst practically the entire economy and the entire world. I never bought Google stock because I listened to the institutional imperative and since then, it seemed too risky. I do however think that Google is worth every penny and could be worth much more; so I certainly do not want to ring any unnecessary alarm bells.
However, it’s important to state that Google’s rumored interest in paying upfront fees to content owners might be very dangerous (for our earlier take on RIAA and Hollywood not learning from history, click here):
According to the Financial Times:
“The fact is that in three to six months every media company’s going to decide that their stuff gets taken down or that they get paid for it,” a media executive said, likening the negotiations to “a big chessboard”.
So far Warner Music, Universal Music and Sony BMG have signed agreements with YouTube to supply some of their content in exchange for licensing fees and a share of associated advertising revenue.
In lieu of upfront payments the music companies received equity stakes in YouTube worth tens of millions of dollars.
Google, having averted that threat, has turned its attention to the film and television companies, offering one $100m to license its content over a two-year period, according to a person familiar with the matter.
ZDNet adds/speculates:
If Google has to provide similar guarantees, in the $300 million range for each of the major networks and $100 million to the smaller nets, such as A&E, to avoid suits when YouTube users upload content from these companies, its content costs would rise precipitously.
Indeed, indeed it might. Between the major film studios, smaller shops and every other content producer whose content is being pirated and played on YouTube, Google might find itself in the red to the tune of $1 billion. That’s $1 billion in initial outlays (and probably for a limited time, say 1 year, tops) on top of its $1.65 billion in stock that Google would be gambling on video content… a red hot but still unproven field.
Video on the web was a $235 million market in the US in 2005, grew to $480M in 2006 and is set to hit $1 billion in 2010 and $2.3 billion in 2011… but let’s face it, these numbers are all abstract numbers based on a wild array of variables of which each single factor can change on any day.
No one has any clue what TV will represent on the Web in 2007, let alone 2010. But, since TV advertising is a $75 billion industry, obviously it’s tempting to tempt fate, as is Google.
Google’s got $10 billion in cash and other securities. Paying $1 billion is not a large hit if it can secure rights to film studios’ and music labels’ content… but once a financial model is in place, the RIAA and Hollywood will immediately diplicate that and offer its content to other digital distributors so Google’s video content will not be as valuable as they might think right now.
For some reason I’ve been spending less time on YouTube since the Google acquisition. That might have something to do with the fact that we’re growing by leaps and bounds and I need to spend more time building the business than looking for random, obscure music videos from the 1980s on YouTube.
That being said, I happened to be on the site today and got one of the most annoying, crappy ads in the history of online advertising… and having worked through the lean 2001-02 years, I’ve seen my share of dung online.
I’d cut the YouTube folks some slack if they were still an independent company having to pay those big bandwidth fees, but man: Steve, Chad, ask Larry and Sergey if you can cash in some shares, anything, all we ask is don’t put up this assvertisement.
In case you can’t see what’s going on, that’s an entire page takeover (like a poor man’s pre roll I assume):
In late, late 1999, I was sitting in a barber’s chair getting a haircut (hey, a lot can happen in a barber’s chair…), reading Time magazine’s “Man of the Year” issue.
I recall vividly that the cover page had Jeff Bezos’ head in a shipping box. Symbolically, he was sitting on top of the world as Time’s man of the year for 1999. Amazon.com was the shiznit and everyone was saying that Amazon.com - please, sit down for this - would acquire Wal Mart at any moment.
I was still working in financial services. The ink on my finance degree was as fresh as could be.
I was sending my resume to every investment bank in the world, no one wold bite. Sitting there and reading the story on Amazon.com, it became clear that if you wanted to make things happen, the Web was the only place to turn to. Christmas came and went and frustration of the investment world turned to excitement and hope of what the Web had to offer.
Two weeks later, on January 13th 2000, I got offered a job at a dot com startup: “we’re going to file for an IPO later this year,” I was told. I started my new job January 31st, 2000.
The IPO never happened and Amazon.com never bought Wal Mart either. But the dream came true (wow, that was deep… I had to throw it in there).
In the meantime, a lot changed. Nasdaq 5,000 became Nasdaq 2,000. Amazon.com gave way to Google, Jeff Bezos replaced by Sergey Brin/Larry Page first, then Tom Anderson/Chris DeWolfe next, then someone else I am sure.
But not once did I consider going back to the finance world. The Web was the only place to be and I knew that the best was yet to come.
Apparently, so did/does Jeff Bezos who is once again aiming for the fences with his new brainchild.
Will it work? Who cares?
This week both 24/7 Realmedia and aQuantive released quarterly results, both companies essentially showed growth to be slightly above the market.
I have owned shares of both throughout this year and earned nice returns. Nothing Google-esque, but representative of the online advertising market’s rise.
Because of those rises, this week the companies disappointed shareholders; here are our thoughts on market’s reaction to the former and the latter.
More importantly, both companies are investing in Asia, and there’s much merit to that strategy:
Both companies see the region teetering on the brink of a serious online ad boom; data from PriceWaterhouseCoopers supports their position. PWC estimates Asia will see the fastest Internet ad-spend growth in the world over the next five years, totaling $110 billion in 2010, driven primarily by growth in mainland China. Ad spend in the U.S. is forecast to grow to a much less impressive $60 billion.
I would like to call time-out and point out that this is the first time I’ve seen the $60 billion figure for the US though. I’ve seen eMarketer peg the US ad market at $25 billion while Morgan Stanley pegs it at $32 billion. Regardless, even at half of PWC’s projection for Asia, the “smart people in the room” seem to think that Asia will easily be a market 2 to 3 times larger than the US for online advertising, and they are probably right, when you consider the boom in China, India, South Korea and the entire region (suddenly, all of that ad inventory we have in India seems more and more valuable every day!).
Disclosure: Of the companies mentioned herein, I’ve owned shares in both companies throughout 2006 but as of this writing I only own shares in AQNT, in fact, I bought today after the 20% meltdown. To read more on why I did that click here.
For the record I do not think we’re in a bubble, but if there was one argument to support the side that we were, it’s this:
The stupidest idea ever is back, rejigged in all of its Web 2.0 glory.
Back in 2000, I was an in-house analyst at a search engine, looking at the market and trying to look at various companies business models, revenue streams, profitability and what not in trying to assertain what our company was worth.
I gave every company’s business model the benefit of doubt, until AllAdvantage that is (click here for Wikipedia’s entry on the entity).
All Advantage, the site that paid people to surf the web is back - and that is a bad, bad thing.
Then:
Top 10 List > Google’s Business Rules
Top 10 List > Google’s Business Philosophy
Now (from Google’s website).
Best part, this:
* Full-disclosure update: When we first wrote these “10 things” four years ago, we included the phrase “Google does not do horoscopes, financial advice or chat.” Over time we’ve expanded our view of the range of services we can offer –- web search, for instance, isn’t the only way for people to access or use information -– and products that then seemed unlikely are now key aspects of our portfolio. This doesn’t mean we’ve changed our core mission; just that the farther we travel toward achieving it, the more those blurry objects on the horizon come into sharper focus (to be replaced, of course, by more blurry objects).
In the past week, both PaidContent.org and Mark Cuban have written some interesting things about Google’s “frantic” efforts to fend off lawsuits over YouTube’s clear violation of copyright laws.
Mark Cuban provides a more Orwellian scenario unfolding, while Rafat Ali shows that indeed, film and record label executives and their lawyers will get as much as they can from Google before and after any potential deal. Like I say, don’t blame the lawyers, they’re doing their jobs, blame the stupid clients who bring these matters onto themselves and will - like sheep - believe everything lawyers tell them.
Regardless of that discussion, it’s interesting to note that if it’s true that Google is willing to pay - at least to - one film studio $100 million for [at least] a six month grace period, then it’s clear that other film studios and smaller firms will line up asking for more than that. In all, Google could be looking at shelling out an additional $500 million to $1 billion to the $1.65 billion purchase price for YouTube for the honor of being the leader of online video, an industry that is very hot in 2006 but that inly generated some $250-300M in ad sales.
Hey, no one said the nonsense that is Web 2.0 includes any common sense.
Bear in mind that I’ve always (probably not alone in saying this, mind you) said that Google bought YouTube in a defensive move with no real intention of making it - over time - become larger than Google Video.
In my opinion, if YouTube is around in 1, 3 or 5 years will be smaller than Google Video. YouTube will be the anything goes forum for amateurs and do-it-yourself video creators, whereas Google TV will become the de facto Web TV platform that many (including Brightcove and others) are trying to become. Google Video has an embedded payment system, Google’s search technology and is already less chaotic than YouTube. It also bears the Google brand, which is catching up the others as the world’s most valuable brand in the world.
So, what is the point? The point is that much like Google bought Sprinks to shut them down only to launch Ad Sense, it is very conceivable that at some point, Google could (I do not think they will) shelf YouTube instead of trying to weed out the copyrighted content. Sure, traffic will dwindle, but who cares? Redirect everyone to Google Video and you just became the #1 online video site for $1.65 billion in stock. Oh, and in the days leading up the acquisition, your stock rose $10 billion so you made a profit of $8.35 billion in stock. That’s financial engineering and marketing in one nice swing.
If what Rafat Ali and Mark Cuban are saying is true translates to one main thing: the RIAA and Hollywood have not learned anything from the Napster fiasco. That lesson was that they could have managed to coexist and leverage Napster, by killing it, the vacuum opened an opportunity for Apple.
The same way that record labels and film studios paid dearly for killing Napster (Steve Jobs and iTunes is far more dangerous and painful to the RIAA than Shawn Fanning ever was, could have been and will be).
It’s far better for the labels and studios to work with YouTube than kill - or force Google to kill - YouTube and focus 100% on Google Video. This might not happen, but at the same time, few actually thought Napster would die.
People just do not learn from history after all…
At least in the universe of the RIAA and Hollywood: greed will always supercede fear.
Fascinating stats regarding “Spanish-Language Media Expansion Surges”:
- During the last decade, the Spanish-language broadcast market has exploded. There were 342 Spanish-language television stations operating in the United States last year, up from 206 four years earlier.
- Two giants dominate the U.S. Spanish-language market:
Telemundo was established in 1986 by bringing together outlets in Miami, Los Angeles and New York. In 1998, it was sold to Sony for $539 million and became a serious marketplace competitor in 2001, when it was acquired by NBC for $2.7 billion.
Univision dominates Spanish-language broadcasting in the United States. It is the fifth-largest network in the country, and it expanded in 2003 with the acquisition of the Hispanic Broadcasting Company radio group.
- During the 1990s, the circulation of English-language daily newspapers dropped nearly 10%, to under 56 million. Circulation of Spanish-language dailies grew from a combined circulation of 140,000 in 1970 to over 1.7 million in 2002.
- Advertisers are expected to spend $1.4 billion on Spanish-language advertising in 2006, up 10% over 2005. The World Cup was partly responsible for the higher ad dollars, but the upward trend has been steady. The growth will continue.
- A disproportionate share of Hispanics in America are ineligible to vote because of age or citizenship status.
More on Forbes.com or the entire version here. Check out WatchMojo.com’s Spanish Edition here (I know, we need more content there, but there are over 2,500 clips in the flagship English edition).
