Kudos to Youtube for getting them to say yes. My advice to you is to always protect your downside. Ignore all the scammers who want your money, and dont listen to all the tax scammers who want to save you money on taxes. Writing that check is painful, but its the right thing to do. That aside..
It will be interesting to see what happens next and what happens in the copyright world. I still think Google Lawyers will be a busy, busy bunch. I dont think you can sue Google into oblivion, but as others have mentioned, if Google gets nailed one single time for copyright violation, there are going to be more shareholder lawsuits than doans has pills to go with the pile on copyright suits that follow. Think maybe how Google discloses what they perceive the copyright risk to be in the SEC filings might be an interesting read ?
I think there will be supoenas to get the names of Youtube and Google Video users. Lots of them as those copyright owners not part of the gravy train go after both Google and their users for infringement.
It will be interesting to see how this impacts DRM. As it stands now, there is no DRM on all that video being offered from Google or YouTube. Millions of copyrighted videos that their owners spent a boatload to copyprotect that is available to everyone and everyone without it. (Personally i think DRM is a waste of money, but will all those labels and content providers ?)
I think it was interesting how Google and YT both rushed to get deals done with the music labels. That tells me that they arent comfortable hiding behind the safe harbor laws. If they were, they would just be telling people to send take down notices rather than doing deals that require software to detect copyrights.
It will be interesting to see if Youtube moves their videos over to Googles Data Centers. Google is a centralized datacenter with peering from what I can tell. COmpletely different than what the CDN networks do. Will that set a new trend ? It makes bandwidth much cheaper as others have pointed out.
It will be interesting to see just how google reconciles selling videos like Crazy in Love from Sony, when the same video is available as a user upload for free from youtube.
it will be interesting to see how Fox reacts to this deal Fox owns content. Neither google or YT does. Could Fox, the owner of Myspace put GooTube in a huge hole by being legally aggressive and going after every video of Stewy from Family Guy , American Idol, any of their TV shows ? The same with their movies. Beyond just Gootube, (and I mash them together with nothing but love :), Fox could make them look real bad by using supoaenas to go after individual Gootube users. Fox is also a stickler for DRM, they aint gonna like having their content floating DRM free around the net. Sure, myspace would have to clean up some of their own videos, but it would be a far easier chore than Gootube has. Now that would be a celebrity lawyer match worth watching.
Which in turns means that the Copyright Detection Systems in place by Google better be a whole lot better than they are right now. They are going to have to detect music, TV Network Bugs, all kinds of protected materials. Right now they are doing nothing. Which leads to movies, like ours
We sent our Take down notice today by fax. But should I supoaena the name of the person who uploaded it ? I wont. Someone else will for their content.
And what if Im completely, absolutely wrong and no one sues anyone ? That everyone just loves the fact that their content is available to tens of millions of viewers and advertisers and Youtube and Google definitely qualify to be protected behind the Safe Harbors of the DMCA ?
That Im an idiot and it really is different this time, and the content companies have all recognized that ?
Well, I'm ready for that too. I went ahead and registered www.effingreat.com because thats how much fun its going to be using Filesanywhere.com features to support a "load everything you own and share it with world" website.
I will host in the same way as Youtube and Google. Upload in the same, dont ask, dont tell approach. I will sell ads however they do. Preroll, or adsense or whatever.
Only i will expand the storage beyond 100mbs and will open it up to books, term papers, pictures, movies, music, articles, anything and everything that can be digitized. I will add the appropriate disclaimers and provide a cool social networking interface. Maybe something like Goowy.Com or maybe something like Flixster.com. I mean, why not ? What could be cooler User Generated Content than the termpaper you wrote on Daniel Boone ? Or what could be more interesting than scanning in a book you wanted to give to someone and just posting it ? And dang, just wholesale upload all of your MP3s.
And best of all, I would get a license for public performance from ASCAP/BMI so the people that have to fight the hardest to get paid, actually do !
And of course I would have some other tricks up my sleeve. Maybe pull a page from the old shareware days. Add a paypal link to every content page and let people get paid for their original content. If no one is going to sue anyone for copyright infringement anymore, maybe you could upload stuff you dont have the rights to and get paid by generous people who want to transfer some dollars via PayPal to you.
Am I suprised, by the Google YT deal. Yes. Does it open up a whole new world if they go liability free ?
You have no idea.
I still think Google is crazy :)
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Reader Comments
(Page 2)22. Michael Arrington over at Tech Crunch has an interesting persepctive on the Google/YT purchase.
He speculates that since Fox isn't among the content deals that have been annouced recently for YT, and that Fox, owners of Myspace, consider YT their competition, perhaps there could be some future united front by the studios (Universal...etc) to pull their content from YT and create their own version of YT.
It's an interesting read:
http://www.techcrunch.com/2006/10/09/is-fox-a-factor-in-the-googleyoutube-deal/
Posted at 8:10PM on Oct 9th 2006 by Kat Jacobs
23. Google could have built a knockoff of YouTube (GoogTube) for $10 million tops, with better features. So why did they pay $1.6 for YT? I suggest looking at the value of the contracts YT already has with MySpace etc., as Google probably sees a lot of revenue potential that it is uniquely able to capitalize on.
Posted at 8:27PM on Oct 9th 2006 by Matthew Grayson
24. Mark - my first reaction is "brilliant stuff from an insider", but I also respect how clever Google is and will continue to be at re-railing the online train. Big producers will do big deals with Google as they are right now. But the growing community of small time content producers (e.g me) is a lot more willing to share and forget about copyright encumbrances *as long as you cut me in on the action*. If Google can monetize my stuff better or close to as much as I can then more power to them. I'm confident I'm speaking for 80%, and probably 98%, of the long tail. Can the other 2% sue them? Yes, but not painfully enough to stop the online video train o progress.
Posted at 8:34PM on Oct 9th 2006 by Joe Hunkins
25. No doubt all of us who expressed our concern about your previous statements feel vindicated. At least, we feel that Google has validated our views on the future of online video.
You're right, there are real copyright issues that are being figured out, but we have every indication that publishers are seeing value in places like YouTube, and consumers certainly are finding them valuable.
26. First off, Mark I enjoyed your article. You make great points
Second, I don't think Google will loose any battles over Copyright issues. These sites like YouTube and Streetfire and whatever else act purely as a host. If somewhere in the Terms for listing these videos it states that the user takes full course for their actions.... Then how does it become google's fault for the user violating copyright laws. Technically the way I see it then is they (google)are mearly just acting as a free hosting company that has a big community with lots of traffic.
Third, I think if there was an issue at hand then one of the high powered lawyers that google has would have spotted it before a 1.65 bn dish out. If they overlooked on something then major shame on Google and they will pay dearly for it.
Assuming that this will work out for Google like I think it will then they just spend 1.65 bn on something that was well worth it.
Posted at 8:39PM on Oct 9th 2006 by Nick P
27. Mark,
Your analyses on this deal were quite refreshing. However, I think it is going to turn out fine for Google. The big guys will probably get into deals with Google and make their money that way. The little guys might get an opportunity to make money via ads. And the balance, sure Google gets to keep that change. A lot of it. If everyone is making money, where is the incentive to sue then ? Sure, some folks will try nevertheless.
The copyright issue is central to Google..as almost everything they deal in has to do with organizing and monetizing data...which they don't own (web search, images, books, videos, etc). There couldn't be a company in potentially deeper copyright trouble and at the same time better positioned than Google to deal with the issue.
Now, with Apple's iTV and the Google/Apple/YouTube trifecta, I am looking forward to the day when I can buy the Apple iTV, and view YouTube videos delivered by Google, all on my TV.
Posted at 8:42PM on Oct 9th 2006 by Varun Mathur
28. Mark,
How about this unauthorized use of the Mavericks logo. Why should Google make money off of the Mavericks. You should sue Google. That would make news!
http://video.google.com/videoplay?docid=6356458336830622067&q=mavericks
Posted at 8:43PM on Oct 9th 2006 by Doug
29. Mark, I agree with you completely. I'm a Spurs fan, dislilke the Mavericks, normally read your blog to see what the wingnut thinks, but you're spot on with your analysis here (and in earlier posts) of the YouTube so-called "business model."
Google is losing it, flailing at too much stuff. And it pains me deeply to say that. Google once upon a time was an innovator. I think one primary cause is Eric Schmidt, their non-founder CEO. Google needs to get back to its original founders and its original personality, very much like Apple and Steve Jobs, or its mojo will be gone forever.
In closing, two words: short Google.
Posted at 9:00PM on Oct 9th 2006 by Joe Baressi
31. "Google will share revenue derived from the content with the uploader, any copyright owners, and Google of course."
No. They're not going to pay the uploader anything. The uploader (and possible content thief) is going to be the engine that drives more corporate profit. This is just a variation on the idea that music companies can still make money off of p2p downloads. Attention has value. And it all ties back to ad revenue.
YouTube is going to use the DMCA a let rights holders issue their notices. Only before that happens we might see the intergrated advertising. And the revenue stream might give the rights holders pause. Here's a scenario:
Dumbsh*t dude uploads his video that has someone else's copyprotected music playing to it. The page has ads on it. The revenue from the visits goes into a fund tied to that upload. The rights holder issues a takedown notice, only Google sends them a check - the proceeds from the ad revenue. Google takes a percentage and the uploader gets nothing. Google is happy and the rights holder is both surprised and happy. The uploader thinks he's getting away with something but doesn't realize he's creating content for someone else. The rights holder agrees to a limited license on that particular upload in exchange for that check and future revenue from the embedded adsense or whatever else is on the page.
If someone uploads a music video, same scenario. Sure anyone can post it to their blog or whatever, but community is key; and that's where the best advertising resides because they're targetable. The sifting sites might bleed off some traffic, but there are ways to deal with that as well.
This is going to be interesting.
33. Only time will tell what will happen. The only certainty for right now is that Chad Hurley and Stephen Chen have become instant multi-millionaires with Google stock.
If I were them I would stay on for a little while longer before cashing out their hundreds of millions and retiring to the good life. There is way too much unpredictability in this Web 2.0 business to know the future.
Posted at 9:10PM on Oct 9th 2006 by Krazy K
35. Great thoughts on the subject. There is no question why Youtube rushed to ink the deals with the music companies. And you're right, if and when there is a lawsuit filed, there'll be lots of them.
Posted at 9:52PM on Oct 9th 2006 by girl's basketball
36. csven, I disagree that the uploader doesn't contribute value to the copyrighted content. Without the uploader, there is no value proposition and there is no traffic. People aren't watching user-created videos because they can listen to a song that's available elsewhere. The uploader has added value to the song because people are willing to watch the video for its unpredictable content. Why shouldn't the uploader participate in a small portion of the revenue generated. Without user-generated content, you have no social network. Maybe google could pull an ebay and charge a small insertion fee (read licensing fee) to post the video with copyrighted material. if the video drives traffic, then the uploader receives a portion of the ad revenue. the insertion fee could be split to pay royalties and help google cover its hosting costs. Bottom line, with the uploader's contribution, there's nothing to watch except corporate-produced content...which is like listening to top 40 clear channel radio. no thanks.
Posted at 10:22PM on Oct 9th 2006 by Christopher Peterson
37. $1.6Billion dollars for a website that was created just over one year ago. And all this site does is it allows you to share your videos with everyone around the world. Wow. Talk about getting paid for an idea that can be copied by everyone and their dog….. When did buying something for the sake of hype turn into brilliant business sense? This, to me flies in the face of smart business practice.
Have we forgotten March 2000 already? The stock analysts are trying to outdo each other to see who can put a higher target price on Google. Kinda similar to what was happening at the height of the 'Net "bubble". All the talk today is how Google did a “coup” buying out YouTube.
Call me a contrarian, but where is the voice of reason in all this? This deal reminds me of that whole convergence theme created by the ginormous merger of AOL and Time Warner a few years back. Where are those stocks now? (Time Warner stock hit a high of $95 or so in 2000. It trades in the teens right now.)
Past performance is no indicator of future returns…..However, if one ignores the mistakes of history, one is bound to repeat those same mistakes….
I found myself taking a look at the January 2009 Google put options with a strike price of 220 selling for $0.25. They’re looking mighty tempting…….
Posted at 10:48PM on Oct 9th 2006 by Copperfield Jean-Louis
38. Google's latest aquisition of YouTube could be seen as the search giants attempt to consolidate its lead in the search arena. The fact is most users go to www.YouTube.com to look for videos that they are interested in. Because they know they will more often than not get it from YouTube rather than from Google Video or even Yahoo's own video search. They to go YouTube because it's videos are fast to load and it's very easy to upload videos. As for DRM encrypted videos, i still think that there is a way for the public to view and even download copyrighted contents on the YT site. For me it's a coding challenge and we all know how many 'capable' coders are there in Google. We all look at the negative implication of the Google's acquisition of YT. But there's lots of plus points too. Advertising is one. Google will possibly in the very near future roll out a 'system' in which it's AdSense ad co-integrate with YT videos out there. Perhaps next time there will be 'tiny' YT clips on every AdSense ads. Imagine how many YT clips are being embedded onto web pages and blogs. Just imagine for a moment, if Google will be able to use this 'information' to tie-in this with the AdSense ads that are featured on the same web sites and blogs. Everyone that 'clicks' on the embedded YT videos will see the video being streamed, but more interestingly, the AdSense ads will 'notice' this user 'behaviour' and then 'collects' this info...
Sorry my brain is being overloaded at the moment. Sorry for the rambling...haha
Posted at 11:12PM on Oct 9th 2006 by cutebanana
39. While I understand where you're coming from vis-a-vis the potential for the copyright issue to blow up in Google's face, the worst case scenario for these losses could amount to tens of millions of dollars. This isn't a Google contention; this is a content industry contention: they're almost self-limiting themselves before they get their lawsuits off the ground.
The potential size of a video-monetized advertising market is orders of magnitude larger than that. From a risk-reward perspective, it's clear that Google sees this somewhat differently than you do.
It'll be interesting to see how quickly Google moves to consolidate the relative strengths of YouTube's service and audience with its own search/advertising model. It'll be interesting to see how well Google is able to maintain its focus through the haze of copyright-related litigation.
I suspect a year from now we'll all still be debating the relative merits of this very deal. Forgive me if I don't fully agree with you just yet: I'll watch and wait before rendering final judgment.
Carmi
http://writteninc.blogspot.com
40. Google = Time Warner
YouTube= AOL
Me in 2yrs = Carl Ichan
Posted at 11:56PM on Oct 9th 2006 by XDA
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21. I consider you my hero Mark, but I'll have to disagree with you here. Let's not forget that Google has been known to make the impossible possible in the past. Let's not forget that we're talking about the most successful .com EVER! Lets not forget that Google has top legal gurus like David Drummond in their management team.
I assure you that Google has a plan for YouTube which will definitely generate $$ for Google's shareholders. Also, you may be exaggerating the potential legal problems facing Google. Yes, it is possible that someone will bring a copyright violation action against Google, but going as far as to say that in such event, Google will get flooded with derivative shareholder lawsuits is quite an absurd statement. Derivative shareholder lawsuits require a stringent showing of breach of fiduciary duty and I can't imagine any of such lawsuits surviving the pleadings stage.
In the end, I say that you congratulate Google on its purchase!
Posted at 8:10PM on Oct 9th 2006 by Vik