NEWS
Google: Viacom wanted to buy YouTube
Friday, March 19, 2010
••• Court filings released on Thursday in the bitter $1 billion copyright fight between Viacom and Google’s YouTube show just how far apart the companies remain, as the 3-year-old case winds through federal court.
Viacom, in 108 pages of court documents, portrays YouTube’s founders as reckless copyright violators who were far more concerned with increasing traffic to their site than obeying the law. Even executives at Google, which acquired YouTube for $1.7 billion in October 2006, questioned the ethics of building a site through questionable copyright practices, according to the Viacom filings.
But in the 100-page document filed by Google, perhaps not surprisingly, the search engine tells a different story. Viacom is painted as a media giant trying to play it both ways: demanding that YouTube take down videos even while third parties were uploading Viacom content on the entertainment giant’s behalf. More intriguingly, the parent company of MTV and Paramount Pictures was at one point interested in acquiring the video-sharing site, according to the documents.
“We believe YouTube would make a transformative acquisition for MTV Networks/Viacom that would immediately make us the leading deliverer of video online, globally,” according to an internal Viacom slide that Google filed with the court.
Interesting as the documents may be, it’s not clear which side will benefit most from the disclosures. Google argues that it is protected by the safe-harbor provision of the Digital Millennium Copyright Act, which says, in short, that if a Web site acts in good faith to take down copyrighted content as soon as it learns of it, and it has not benefited financially through advertising or other means, it is protected from a lawsuit. Viacom is attempting to pierce that protection by proving that YouTube employees, at the very least, knew of rampant copyright violations on their site and did little about it.
U.S. District Judge Louis Stanton, in the Southern District of New York, set March 5 as the deadline for filing for summary judgment and gave the parties until April 30 to file opposing arguments to each other’s motions. All the arguments should be completed sometime in June. If the case proceeds to trial, it should occur sometime this year.
Legal scholars believe that the outcome of this landmark suit could well determine who gets to profit the most from content: the people who pay for its creation, or the people who help disseminate it over the Web. It could also determine whether YouTube, by far the most popular video site, suffers from an original sin of rampant copyright violation before Google took over.
Ill-gotten rewards, destroyed e-mail?
While there are still questions as to how much money Google is or is not making from YouTube, there is little doubt that YouTube’s founders profited handsomely from selling their company less than two years after building the site. According to court records, YouTube founders Steve Chen, Chad Hurley, and Jawed Karim walked away with $334 million, $301 million, and $66 million, respectively.
According to Viacom, those were ill-gotten rewards. The three young men had already planned to look the other way, as far as copyright violations were concerned, court documents claim. Their intent was to create the online-video equivalent of Napster and then sell it. To do that, Viacom claims that the team sought ways “to avoid the copyright bastards.”
Viacom said in one e-mail that Chen urged associates to “concentrate all our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil.”
Viacom suggests that it may not have been given the benefit of finding out the whole story at YouTube, whose managers did not turn over some e-mails belonging to Hurley. The reason Google gave for any missing correspondence was that Hurley’s e-mails were accidentally destroyed when his computer suffered a malfunction sometime before the Google acquisition. Viacom said, however, that it was able to retrieve some of Hurley’s e-mails from Karim.
Those e-mails show that YouTube managers knew that employees uploaded unauthorized content and applauded such moves, Viacom claimed.
Google argues that Viacom has distorted and taken out of context many of the statements from YouTube’s e-mails while doing a sloppy cut-and-paste job on some of the YouTube e-mails. In one e-mail from Chen to Karim, it said, Viacom omitted the word “stop” from this passage: “In other news, Jawed, please stop putting stolen videos on the site.”
Google provides several e-mails showing that from the earliest days of YouTube’s existence, the founders sought to protect copyright. In one April 25, 2005, e-mail, Chen tells the other co-founders that videos would be rejected that violated one of the following rules: “video must be about you, must be appropriate for all audiences, cannot contain contact information, no copyrighted material.”
In an apparent attempt to underscore YouTube’s usefulness and to suggest that Viacom is being hypocritical, Google noted that Viacom continues to do business on YouTube.
Even after waging the court battle against Google and YouTube, Viacom continues to permit some of its materials to be posted there, according to a statement entered into the record by David King, who oversees YouTube’s Content Identification System, the technology designed to filter out copyrighted materials and block them from being reposted to the site.
“For some of its reference files, Viacom has instructed the site to block, which means take it down and prevent it from going up again,” King wrote. “But on others, Viacom has instructed YouTube to leave the clips up and provide the company with information “about how YouTube users are engaging with the matching videos.”
Viacom’s attempt to buy YouTube
According to Google, Viacom “thought so highly of YouTube that it tried, unsuccessfully, to buy it” in 2005, the search company wrote. After Viacom’s negotiations to buy YouTube fell through, it took a “strong-arm approach” in talks with Google as the new owner and at that time “deliberately allowed its content to remain on YouTube” to boost the ratings of TV shows.
Viacom, according to Google, was serious enough about acquiring YouTube that it extended an offer. What Viacom suggested to YouTube was that Viacom and Google buy it and operate the service together.
“So the idea would be Viacom and Google buy YouTube,” Adam Cahan, a former executive vice president at Viacom-owned MTV Networks and now the CEO of Auditude, wrote in a cited e-mail. “Viacom legitimizes the content on the site by providing content and developing a business model.”
Some YouTube supporters are bound to wonder whether Viacom’s lawsuit was just retaliation for being outbid by Google.
On the other side, Viacom argues that it was always the intent of YouTube’s founders to draw an audience by piggybacking on the popularity of professionally made clips. But first, Viacom claims that the team tried to come up with ways “to avoid the copyright bastards.”
Google says Viacom has distorted and taken out of context many of the statements from YouTube’s e-mails.
While some of the accusations that each of the parties are flinging at the other are intriguing, many of them will have little or no bearing on the relevant issues. What’s most important now is the judge’s reading of the Digital Millennium Copyright Act of 1998.
Google’s legal defense rests on the wording of the DMCA, whose safe-harbor provision says that as long as the Web site does not have knowledge of “apparent” infringing activity, and as long as it does not receive a “financial benefit”–such as displaying advertisements on the page–it will generally be immune from lawsuits.
Viacom insists that Google doesn’t qualify for the safe harbor because it not only profited by selling ads on the site, but it also built up a large fan base that was drawn by the unauthorized copies of films and TV shows. In addition, Viacom argues that Google had knowledge of copyright violations, as is evidenced in the e-mails from YouTube’s founders.
Whichever way Stanton rules, the losing party will probably appeal. The final outcome of the case will likely help clarify whether protecting intellectual-property rights on the Internet is the responsibility of a copyright owner or a Web site operator.
Regardless, it’s fun reading, if you’re into this kind of thing. Note the concern among Viacom executives that News Corp. would end up owning YouTube instead of them.
Viacom’s statement of undisputed facts
Google’s statement of undisputed facts
••• Ten years to the day after Concorde plunged from the skies near Charles de Gaulle airport in Paris, victims of the tragedy have been remembered.
All of the mainly German passengers on board the New York-bound flight perished alongside its Air France crew and four people on the ground.
Controversy still surrounds what went wrong. The verdict in a manslaughter case is due in December.
Dominic Stoughton's Blog 
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