Mark Cuban posted an email from the pho list this week that tells quite a story about the inside dealings between Google, YouTube and the media companies who have been seeking compensation for copyright infringement. I am on the pho list. The insights of this group of people have provided me with such valuable perspectives on the changing media culture. This posting was one I read with amazement as it illuminates the feverish and almost reactionary climate that seems to be engrossing the media world as it deals with the almost facile ability of people to post media of their choosing, be it their own or third party copyrighted material.
Acquisitions are complex but reading this email, you quickly realize how the people shaping a deal can become so zealous that in hindsight they almost posseses a disregard for the implications of their actions.
Most striking is how critical Google views abundancy and what tactics are being employed to satisfy the media companies so that abundancy may be maintained. For without abundancy, YouTube is only an illusion of a great video sharing network that can only feed so many before the ingredients become scarce or of little quality.
Scarcity is not a problem that YouTube currently faces. An abundance of media is what drives the video sharing site. It’s this abundance that matters most to YouTube. People go to YouTube for what it offers them. Authentic takes on our culture, clips of favorite TV shows and the widest selection of lip syncing videos ever assembled in one place.
But YouTube could not have lasted by itself. And I’m not so sure how it will sustain itself under Google if the copyright owners get impatient and demand more take downs and an ever increasing revenue stream for the copyrighted material that YouTube users post. But if nothing else, it is looking if the media companies are starting to see a relationship, if only an abstract one, between what is posted on YouTube and the image of their media empires. Case in point, this week’s decision by YouTube to take down Comedy Central videos only to be followed by Viacom’s subsequent permission to allow the postings. The videos are now back up and negotiations have commenced.
The media companies have maintained their tremendous strength in large part because of scarcity. That is all changing as the laws of the Internet dictate media abundance. Chris Anderson presented at Pop! Tech recently, discussing the economy of abundance and its effects on us all.
But how long will the media companies keep a hands off approach to YouTube and what will it cost Google to keep them at bay so the search company may maintain the laws of abundance?
If the laissez-faire approach by the media companies continues, like what we are seeing with Viacom, then Google may be able to maintain YouTube’s lead in the video sharing space. But if the tide turns the other way, then YouTube may falter, its model only an illusion.
And that’s why the events that the email details may prove so true in the long run. Google’s desire for abundance appears to have shaped its dealings with the major copyright owners. But desire can be very dangerous and lead to all sorts of unexpected consequences.
As the email to the pho list points out, the media companies received a susbtantial sum of money as part of the YouTube deal, which they are reportedly counting as an investment, meaning they would not have to compensate artists for the windfall. From the pho email:
The media companies had their typical challenges. Specifically, how to get money from Youtube without being required to give any to the talent (musicians and actors)? If monies were received as part of a license to Youtube then they would contractually obligated to share a substantial portion of the proceeds with others. For example most record label contracts call for artists to get 50% of all license deals. It was decided the media companies would receive an equity position as an investor in Youtube which Google would buy from them. This shelters all the up front monies from any royalty demands by allowing them to classify it as gains from an investment position. A few savvy agents might complain about receiving nothing and get a token amount, but most will be unaware of what transpired.
In return, Google is reported to have made a deal with the media companies that shows why abundance is so critical to YouTube’s continued strength. Google could not strip the site of copyrighted material. If Google did that, the site would be a skeleton of its former self. People would quickly notice the scarcity, leaving in droves. According to the pho email, Google realized that they needed the media companies to essentially look the other way so the abundance of user generated media would continue to proliferate on the YouTube network:
The first request was a simple one and that was an agreement to look the other way for the next 6 months or so while copyright infringement continues to flourish. This standstill is cloaked in language about building tools to help manage the content and track royalties, some of which is true but also G knows that every day they can operate in the shadows of copyright law is another day that Youtube can grow. It should be noted that Google video is a capable Youtube competitor with the ONE big difference being a much more sincere effort to not post unauthorized works – and Google fully appreciates what a difference that makes. So you can continue to find movie clips, tv show segments and just about every music video on Youtube today.
And now, here is where I question if the desire for traffic and abundance trumped any rationale thinking. According to the pho list email, Google had one more request for the copyright owners:
The second request was to pile some lawsuits on competitors to slow them down and lock in Youtube’s position. As Google looked at it they bought a 6 month exclusive on widespread video copyright infringement. Universal obliged and sued two capable Youtube clones Bolt and Grouper. This has several effects. First, it puts enormous pressure on all the other video sites to clamp down on the laissez-faire content posting that is prevalent. If Google is agreeing to remove unauthorized content they want the rest of the industry doing the same thing. Secondly it shuts off the flow of venture capital investments into video firms. Without capital these firms can’t build the data centers and pay for the bandwidth required for these upside down businesses.
The desire for abundance is overwhelming for video sharing sites. It is the abundance that fuels their growth. But desire can be a dangerous thing. We’ll see how dangerous it really is as events unfold in the ever changing relationship between the media giants, Google and the people that make these social networks such fascinating places to explore.
Posted by marshallk 
SplashCast - Social Media Syndication 