Wednesday, March 14, 2007
REUTERS: Google's YouTube faces mounting copyrightright challenges
predicting an eventual clash over U.S. copyright law. A lawsuit filed by
the owner of MTV and the Comedy Channel against Google subsidiary YouTube
apears to have joined the battle. What are the likely consequences?
Tue Mar 13, 5:50 PM ET
Viacom in $1 billion copyright suit versus Google, YouTube
By Kenneth Li and Michele Gershberg
NEW YORK (Reuters) - Media conglomerate Viacom Inc. sued Google Inc. and
its Internet video-sharing site YouTube for more than $1 billion on
Tuesday in the biggest challenge yet to the Web search leader's strategy
to dominate the online video market.
The lawsuit accuses Google and its popular online video unit of "massive
intentional copyright infringement" for allowing users to upload popular
shows, threatening ambitions to make YouTube a major entertainment and
The legal challenge from Viacom, home to the MTV and Comedy Central
channels, also suggested a wider battle between traditional and Internet
media companies that now compete for audiences and advertising dollars.
"This is a seminal event in Media-Internet relations ... and how the value
of content will be clarified in the online medium," wrote UBS analyst
Aryeh Bourkoff in a client note.
Shares in Viacom slipped 9 cents to close at $39.48 on the New York
Stock Exchange and Google shares fell $11.72, or 2.6 percent, to $443.03
Viacom has been the most vocal critic of YouTube during months of
negotiating over payment for use of its programming. The Sumner
Redstone-controlled company last month demanded YouTube pull over 100,000
video clips uploaded by users.
"YouTube's strategy has been to avoid taking proactive steps to curtail
the infringement on its site, thus generating significant traffic and
revenues for itself while shifting the entire burden -- and high cost --
of monitoring YouTube on to the victims of its infringement," Viacom said.
YouTube does not prevent copyrighted content from being uploaded onto its
site, but will take material down at the request of copyright owners.
Google said it was confident that YouTube respects the copyrights at issue
in the Viacom case.
"We will certainly not let this suit become a distraction to the
continuing growth and strong performance of YouTube," Google said in a
General Electric Co.'s majority-owned NBC Universal and News Corp. have
also criticized YouTube's policies on copyright protection but stopped
short of legal action, testimony to the dilemma of media companies forced
to choose between embracing a fast-growing outlet for younger audiences
and trying to build competing Web vehicles themselves.
"We've dealt with YouTube on a case by case basis to have content taken
down," a News Corp. spokesman said, adding that the company supported
Viacom's right "to protect its own content in whatever way it needs to."
Viacom found another ally in Time Warner Inc.
"It is clear from this lawsuit that it is time for YouTube to remove
unauthorized material from its site," a Time Warner spokesman said. "We
are in talks and hopeful we can work together toward a solution that would
effectively identify and filter out unauthorized material and license
copyrighted works for an appropriate revenue share."
Viacom contends that almost 160,000 unauthorized clips -- from excerpts of
comedy talk show "The Daily Show with Jon Stewart" to pieces of children's
programs like "SpongeBob SquarePants" -- have been uploaded on to
YouTube's site and viewed more than 1.5 billion times.
The decision to sue Google followed "a great deal of unproductive
negotiation," the company said.
Viacom filed the suit in the U.S. District Court for the Southern District
of New York, seeking an injunction against further violations and damages.
Google bought YouTube last November for $1.65 billion, aiming to
capitalize on its explosive audience growth built from sharing both
homemade and professionally produced videos.
YouTube has reached licensing deals with major record labels, but still
faces the ire of major media companies. Google has promised new technology
to help identify pirated videos, but has not given a timetable for its
Any progress Viacom makes in its lawsuit could spur other companies to
consider legal action against YouTube and raise new questions about the
laws governing digital distribution.
"If there's anything central to Google's business model, it is being at
the center of everything," said Forrester Research analyst James McQuivey.
"This has the potential to put them on the periphery."
Viacom and peers like NBC Universal, in which France's Vivendi owns a
minority interest, are also investing heavily in their own Internet video
sites to benefit from the migration of television audiences to the Web.
"There is certainly an opportunity for YouTube to do a deal with Viacom,
but Viacom does not have to have a YouTube deal," said analyst Richard
Greenfield of Pali Capital.
Google's dominance in Web search has made it a magnet for lawsuits by
copyright and trademark holders.
The Silicon Valley company faces outstanding lawsuits in the United States
and Europe by major book, magazine and online news publishers as well as
small-time Web site operators.
Google has prevailed in high-profile suits against it by auto insurer
GEICO -- owned by billionaire investor Warren Buffett's holding company
Berkshire Hathaway Inc. -- over trademark infringement, and in a demand by
the U.S. Justice Department for consumer Web search data.
(Additional reporting by Eric Auchard)
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