For months, YouTube’s co-founders, Chad Hurley and Steve Chen, have walked a fine line between encouraging their audience to upload video clips and soothing the nerves of anxious rights holders who could have crippled their fledgling start-up with copyright lawsuits.

Even after the group’s $1.65bn acquisition on Monday by Google, some observers remained sceptical that even Google and YouTube combined would be able to overcome the technical and legal challenges posed by copyright.

“Any sort of material that’s posted on YouTube that includes music is in violation of copyright law,” said Josh Bernoff, an analyst at Forrester Research. “There are many thousands of videos that fit that criterion.”

Monday’s announcement that YouTube had struck deals with CBS and Vivendi’s Universal Music Group provided fresh evidence that big studios see YouTube as a potential partner, rather than an adversary. However, in spite of a recent string of such deals, concerns about copyright remained.

“I see no evidence that YouTube has figured out how to avoid the copyright issue. “ said Allen Weiner at Gartner. “This deal makes no sense. [YouTube] do have a pretty powerful platform, but it’s a platform in search of a sustainable business model.”

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Mr Chen said on Monday that YouTube’s engineering team is hard at work on improving how content owners could identify material on the site through audio fingerprinting, keyword and context searches. He hoped to release the new technology in the next month. That strategy will now gain the formidable backing of Google’s engineering team.

Mr Hurley said on Monday that the additional resources would help YouTube when it came to dealing with rights holders. He added that YouTube’s task of identifying illegal content would be made easier now it had access to Google’s vast resources and know-how.

“From the beginning, we have always respected rights holders,” he said. “What this deal allows us to do is focus on that more than ever before, so copyright holders can benefit from our site.”

Still, some have suggested that YouTube’s search for a buyer could backfire. Now that YouTube has found a parent with deep pockets, they say, copyright holders may find it more attractive to sue Google for infringements.

“YouTube may have avoided major lawsuits so far because they have limited funds,” said Greg Kostello, founder of a rival video site vMix. “Any acquirer with large amounts of cash will make it a great target. While it’s true that YouTube has struck deals with a few media companies, they would need to make deals with virtually all of them to avoid major copyright lawsuits.“

Meanwhile, some analysts said YouTube’s outreach to big studios would risk alientating the legions of amateur videographers whose homemade videos helped cement YouTube’s meteoric rise to an icon of online culture.

“If you have people who are excited about using the service, and come down heavy handed with the copyright, you are going to see people leaving the site,” says Mike McGuire at Gartner. A cursory search of the YouTube site found 25 videos from users debating whether Google should buy YouTube – most were against it.

For their part, music labels seem to have learned some lessons from their experiences with Napster, the peer-to-peer file sharing service that popularised pirated music in the late 1990s and early 2000s.

Much the same as what happened with Napster, there is a series of labels which fear YouTube or anybody who acquires YouTube.

“Music labels have begun to realise the cat is out of the bag with copyright and they’re trying to make money off of it. With video people, that’s not the case. The people who own video still believe that any violation ought to be acted upon,” said Michael Sherman, head of the entertainment practice at Jeffer, Mangels, Butler and Marmaro.

Mr Sherman said studios are of two minds when it comes to dealing with YouTube. On the one hand, studios such as Warner Music and Universal have decided to work with YouTube rather than trying to destroy it at the risk of alienating their audiences.

On the other, groups such as Paramount have taken a harder line.

Google itself is no stranger to copyright controversy. It is preparing its defence for a lawsuit filed a year ago by the Association of American Publishers. They complain that a Google Print programme that would digitise and make available large parts of the book collections of leading universities would infringe on the copyright of publishers and authors.

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Sources: Citigroup; comScore Media Matrix

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