A couple of weeks before Google announced in October that it was buying YouTube, Mark Cuban famously declared that “anyone who buys [YouTube] is a moron.” Speaking before a group of advertisers in New York, he went on:
They are just breaking the law. The only reason it hasn’t been sued yet is because there is nobody with big money to sue.
Now, however, YouTube is part of a company that reported $3.1 billion in after-tax profits last year. And the first big lawsuit has just been filed, by Viacom, which is asking for more than $1 billion in damages and an injunction to stop YouTube from allowing any unauthorized Viacom videos to be uploaded onto the site. All along, YouTube has removed videos from the site whenever copyright-holders ask it to. But according to Viacom’s complaint (the WSJ has a pdf copy available for download here), filed today in U.S. District Court in Manhattan:
YouTube’s intentional strategy has been to take no steps to curtail the infringement from which it profits unless notified of specific infringing videos by copyright owners, thereby shifting the entire burden–and high cost–of monitoring YouTube’s infringement onto the victims of that infringement.
In fact, under Google, YouTube is in the process of switching to a business model in which it cuts ad-revenue-sharing deals with owners of copyrighted content. It just closed such a deal with the BBC a couple weeks ago. And it has been in negotiations with Viacom. But Viacom claims GooTube has been using lax copyright enforcement as a negotiating tool:
By limiting copyright protection to business partners who have agreed to grant it licenses, YouTube attempts to coerce copyright owners to grant it a license in order to receive the protection to which they are entitled under copyright laws.
Of course, Viacom’s lawsuit may be a negotiating tool, too–a way of getting a better ad deal on all those Daily Show clips when they finally reappear on YouTube. I personally hope so, because it’s often hard to find what you’re looking for on Comedy Central’s website. Which is sort of the interesting quandary for media companies: YouTube does a consistently better job of getting their content before a large Web audience than they do. Is that really a distribution channel you want to turn off?
As for YouTube, its freewheeling, anybody-can-upload-anything-even-if-it’s-copyright-protected era appears to be coming to a close. My sense is that it will survive the transition just fine, although I guess it is worth remembering that today’s hottest Web property on the planet has on occasion become tomorrow’s roadkill.
Finally, Cuban hasn’t said anything about the Viacom suit on his blog yet–although his most recent post is an interesting account of what he has learned by subpoenaing Google for the names of users that were uploading copies of movies that he owns the rights to.
Update: Somebody with significantly more of a background in this stuff than I have calls the lawsuit “fluffy.” (The DMCA she keeps referring to is the Digital Millennium Copyright Act, which was passed by Congress in 1998.)