Media world eyes Viacom-YouTube slugfest

John W. Schoen • Profile • E-mail

In the latest salvo of a long-running battle between old and new media, entertainment conglomerate Viacom dropped a bomb on rival YouTube Tuesday with a $1 billion suit claiming copyright infringement.

But it’s unclear whether the move changes the rules of engagement in the multibillion-dollar battle for advertising dollars. Some observers say the lawsuit may simply be a move by Viacom to step up pressure in its negotiations to get a slice of the revenue generated from the tens of thousands of videos posted on YouTube.

“For the right economics, (Viacom) would certainly work with Google,” said Ben Schacter, a UBS analyst who has been following the feud.

Viacom has been leading the charge by established entertainment conglomerates in demanding payment for unauthorized posting of its programming on YouTube, which initially developed its huge following by hosting videos created by users. Google bought YouTube last year for $1.6 billion, giving the start-up access to the deep pockets of the Silicon Valley giant.

As the parent of cable networks including MTV and Comedy Central — which enjoy large overlap with YouTube’s younger audience — Viacom has been aggressive in demanding payment for the use of its programming. Last month, Viacom ordered more than 100,000 clips of its copyrighted material removed from Google and YouTube’s sites, claiming its own research shows that its pirated programs have generated 1.2 billion video streams for its rivals.

Google has maintained it is working on technology to better track copyrighted content and has argued its responsibility for the actions of users who post copyrighted material is limited. Google says it is protected by the 1998 Digital Millennium Copyright Act, which extended the rights of copyright holders while protecting online service providers from liability in certain circumstances.

In a statement Tueday, Google said it believed the courts will agree “that YouTube has respected the legal rights of copyright holders.”

“We will certainly not let this suit become a distraction to the continuing growth and strong performance of YouTube and its ability to attract more users, more traffic and build a stronger community,” Google said.

Viacom executives have maintained the get-tough policy is not a negotiating tactic.

“Fundamental to our digital strategy is protecting the value of our content online,” Viacom CEO Philippe Dauman told analysts last month, after telling Google to remove its content. “Since we issued the takedown notice, video streaming traffic to our sites has increased dramatically. This is an important validation of our strategy.”

That strategy include a massive overhaul of one the biggest players in the entertainment industry. Part of Viacom’s battle plan is to build an armada of its own Web sites tied to programming popular with its young viewers, who can watch and comment on shows and upload their own versions. The hope is that multiple sites will cast a wider net for younger, increasingly restless users.

“People tend to find content on the Internet through thousands of front doors as opposed to one," Mika Salmi, the new digital president of MTV Networks, told Reuters. "In some ways we're in a better position than most media companies are — we're where people want to be."

While the YouTube-Viacom dustup has been the most visible, other media conglomerates are watching development closely.

NBC Universal’s newly installed CEO Jeff Zucker has also complained about the unauthorized — and unpaid — use of clips from NBC programs. NBC clips appear with the company logo on YouTube, although the two companies have not signed a licensing agreement. (MSNBC.com is a joint venture of Microsoft and NBC Universal.)

CBS has been more upbeat about the promotional impact of clips of its shows on YouTube, but a proposed licensing deal between the two companies fell apart recently, according to published reports. CBS clips continue to appear on YouTube with the company's logo.

Others have taken a different tack. Last week, the British Broadcasting Corp. began offering up news and entertainment clips on YouTube, becoming the first international broadcaster to sign on.

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