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YouTube: Water Cooler 2.0
For years office co-workers have met and mingled at their local office water cooler and talked about the weekend. But like most things, the water cooler has evolved with the advent of new technology. With more than 100 million viewers a day, YouTube has become the new office water cooler – Water Cooler 2.0. Instead of a conversation about the weather by the old water cooler, office co-workers now gather to watch a unique video of a common individual doing an unusual thing - flipping off of a truck, dancing across a stage, making an amazing shot in an ordinary game of P.I.G. But just as likely office co-workers watch a video that is not so unique, such as college basketball's March Madness or The Daily Show with Jon Stewart.
The problem is that some producers of the content shown on YouTube are not happy that their proprietary content (e.g. video owned by them) is being posted and viewed for free on the website. For example, The Daily Show with Jon Stewart is produced by Comedy Central, which in turn is owned by Viacom, a large media company that also owns networks such as Nickelodeon, CMT, BET, and Paramount Pictures. This means that Viacom owns the copyright to The Daily Show, and therefore may distribute it (or not distribute it) as they wish. Copyright law is based upon the principle of respect for property rights. A copyright may be compared to a deed for a house. Just as somebody wouldn't willingly build a house for somebody else to live in without being paid for building the house, a copyright owner would not willingly create content for somebody else to use without being paid for creating the content.
If there was no law saying that Viacom's content, like the Daily Show, belonged exclusively to Viacom, then another network, let's call it Comedy Center, could tape all the Comedy Central shows and air them the next day. Comedy Center could steal viewers (and revenue) from Comedy Central, especially if they used tactics such as showing fewer commercials. Suddenly, Comedy Central has no protection, and therefore no incentive, to produce original content like the Daily Show. In the extreme, this could result in a world where all shows on TV were reruns!
Viacom is alleging that YouTube is essentially engaging in the same type of activity as the fictitious Comedy Center and in response has filed suit against Google, the parent of YouTube, for damages of $1 billion (roughly 60% of Google's $1.65 billion purchase price for YouTube). Viacom claims that YouTube users have posted hundreds of thousands of video clips owned exclusively by Viacom.
YouTube claims that it is innocent, citing the D.M.C.A. - the Digital Millennium Copyright Act of 1998. The law, in short, states that Internet sites are not liable for copyrighted content posted on their website that they are unaware of; but if the copyright owner informs the site and requests the material be taken down, the site must respond immediately with removal of the content. Google does this; every time a major media company (or any copyright owner with material posted on YouTube) complains about a particular video post, they immediately remove the content. But Viacom alleges that YouTube violates the spirit of the D.M.C.A. because 1) YouTube has the technology to easily locate Viacom material that is posted; 2) the costs that Viacom must endure to find all of their copyrighted material posted on YouTube is prohibitive; and 3) YouTube is currently making significant profits through the use of Viacom's copyrighted content.
If Viacom wins, does this mean the death of the new and improved Water Cooler 2.0? Fortunately, this outcome may be avoided if Viacom and Google can reach a licensing agreement. A license is an agreement between an owner of an asset (in this case video content) and an outside party whereby the outside party is allowed to use the asset in exchange for some form of payment. Other companies, like CBS, have reached licensing agreements with YouTube. Every time a viewer watches a clip of March Madness on YouTube, CBS gets a certain percentage of the advertising revenue generated from the relevant page. Viacom has either reached or examined licensing deals with Apple's iTunes music store and Joost, an online television site that captures advertising revenue for media companies. Licensing agreements can be mutually beneficial to both parties - the outside party can profit from the use proprietary content while the owner of the content has a new delivery method thereby allowing a potential increase in revenues from the content.
So why is it that Viacom and Google have not been able to reach an agreement? It all comes down to price (just like when buying a car). Nobody wants to pay more for a car than what they think it is worth and, similarly, YouTube does not want to pay Viacom more than what it believes it receives in value from the use of Viacom's copyrighted video content. In fact, the $1 billion lawsuit is probably just a means of negotiation meant to give Viacom more power at the negotiation table. Hopefully, Viacom and Google will reach an agreement, ensuring that your office will be able to take full advantage of today's modern water cooler.
Sources:
"Viacom International Inc., Comedy Partners, Country Music Television, Inc., Paramount Pictures Corporation, and Black Entertainment Television LLC v. YouTube, Inc., YouTube, LLC, and Google Inc." Civil Action No. 07 CV 2103. Complaint for Declatory and Injunctive Relief and Damages, March 13, 2007. United States District Court for the Southern District of New York.
"Viacom International Inc., Comedy Partners, Country Music Television, Inc., Paramount Pictures Corporation, and Black Entertainment Television LLC v. YouTube, Inc., YouTube, LLC, and Google Inc." Civil Action No. 07 CV 2103. Defendants' Answer and Demand for Jury Trial, April 30, 2007. United States District Court for the Southern District of New York.
Nocera, Joe. "Awaiting a Compromise on YouTube." The New York Times. March 17, 2007.
Delaney, Kevin J. and Smith, Ethan. "YouTube Model is Compromise Over Copyrights." The Wall Street Journal. September 19, 2006.
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