Google's $1.65 billion DMCA gamble

UPDATE: GoFish CEO + Bolt CEO: Moving advertising from TV to Internet, Exclusive Interview and Universal Music vs. MySpace, Grouper, Bolt, YouTube?

 

Does Google’s YouTube facilitate the theft of copyright content?

 

Perhaps, as I discussed over the weekend in “YouTube riches: Social video production or social video pirating?” 

Google is undoubtedly considering the ramifications of news out today that veteran video sharing site Bolt is negotiating a multi-million dollar settlement with Universal Music Group, known as “the world’s leading music company,” to settle claims that video uploads to its site were a violation of Universal’s copyrights. 

Calling the outcome “economically painful to Bolt shareholders,” Bolt CEO Aaron Cohen said it represents a precedent that “companies that violate copyright at minimum risk litigation,” the New York Times reports. 

The settlement may comprise a combination of cash, stock and advertising credits. To help finance the deal, Bolt has reportedly agreed to sell itself to competitor GoFish for an estimated price of $30 million in GoFish stock. 

As part of the settlement, Bolt will agree to pay royalties to Universal going forward for video uploads containing Universal owned music. 

Universal’s copyright infringement lawsuits against News Corp.’s MySpace and Sony’s Grouper continue.

Google Video and YouTube released agreements with Universal Music last Fall, just hours before Google announced its acquisition of YouTube.

The YouTube deal calls for Universal to allow users to incorporate music from its recorded music catalog into the videos they create and upload onto YouTube with Universal and its artists to receive compensation for both the use of Universal produced videos and user created videos that incorporate Universal owned music.

The companies announced “YouTube and Universal have also agreed to a process to protect Universal copyrights using technology to filter out Universal content that is not authorized to appear on the YouTube service.” 

The Google Video deal: Warner’s music video catalog will be sponsored by Google advertisers, making it free to all users, the resulting generated advertising revenue will be shared by Warner and Google. Besides providing ad-supported content on Google Video, select WMG's music videos will immediately be available for purchase as downloads on Google Video for $1.99. Warner will also work with Google to distribute its video collection via the AdSense publisher network.

The YouTube promised “content identification architecture” technology has yet to be announced by Google. The “new tools and architecture intended to help copyright holders identify their content on the YouTube website,” had been slated for introduction December 2006.

Google acquired YouTube for $1.65 billion and perpetuates its Digital Millennium Copyright Act (DMCA) “safe harbor” business model:

YouTube TOS: YouTube does not permit copyright infringing activities and infringement of intellectual property rights on its Website, and YouTube will remove all Content and User Submissions if properly notified that such Content or User Submission infringes on another's intellectual property rights. 

Does Google nevertheless facilitate copyright infringing activities and infringement of intellectual property rights at YouTube?

 

I have oft said, Google’s days of “ignoring conventional wisdom in designing its business” are numbered.Google may soon be asked to defend its YouTube DMCA enabled, content for free, business model in the courts.

 

UPDATE: GoFish CEO + Bolt CEO: Moving advertising from TV to Internet, Exclusive Interview and Universal Music vs. MySpace, Grouper, Bolt, YouTube?

 

ALSO:  “YouTube: Are YouTubers at risk?” and “YouTube: Is Viacom hurting innocent YouTubers?” and “Why Google will lose its multi-billion dollar video bet”