Now it's war: Viacom sues YouTube/Google for $1 Billion+

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The lawsuit was filed today and Viacom is seeking a ruling to require YouTube and Google to comply with copyright laws and pay more than $1 billion in damages. Especially interesting from the press release is Viacom's description of YouTube's biz model:

Quote:
YouTube is a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent Google. Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws. In fact, YouTube's strategy has been to avoid taking proactive steps to curtail the infringement on its site, thus generating significant traffic and revenues for itself while shifting the entire burden - and high cost - of monitoring YouTube onto the victims of its infringement.

Link to the press release

Comments

oops ,, the youtube

deals is starting to not look so good

hmmm...

sounds like a pretty accurate description if you ask me.

Hollywood Bah

Hollywood Bah what do they know, don't they know we're Google the world is ours and we can do whatever we want, like only paying the taxes we want to, or telling the North Carolina government to keep quiet until we say they can talk. We don't have time for pesky copyright laws it's up to you to "opt out" out of our programs, by default you're opted in, simply because we said so.

Bargaining chip. Viacom want

Bargaining chip. Viacom want something, probably a bigger %age of the ad revenue than G were originally willing to offer.

If Viacom piss G off too much, how hard would it be to quietly go and handjob sites associated to Viacom? Not ban them, just... adjust them a bit. It'd make it hard for Viacom to promote ANYTHING on the WWW except via their own proprietary sites. Google have the cash to disrupt Viacoms acquisition strategy too, putting in spoiling bids for anything Viacom want.

Worst case for Google, this lawsuit will take years to get through court, and endless appeals. The way things are moving, there's a decent chance Viacom will go bust before they could collect anything

Viacom Starts Self-Destruct Timer

What is the business logic for Google to continue listing any site or content related to Viacom? Out of an abundance of caution, why wouldn't Google simply delist everything?

Don't you think Google thought of this before the acquisition? Shouldn't Google have a defense / counter-attack ready to spring? The response will be most interesting.

mark cuban was right

mark cuban was right

Google just bought a turd

I don't know how to say it.. this 1.6 billion dollar purchase just doubled when you add the cost of the lawsuit plus legal fees.

Delisting

If Google deliberately takes action against a company because of a lawsuit where Google is the infringing company it would look like blackmail.

Ok, it would BE blackmail.

Not a good move unless you want all sorts of government types crawling up your ass for illegal activity, making noise about anti-trust, yada yada.

bought a turd when the turd was free?

Founder - While I appreciate the use of "turd" I'm not sure I can agree. After announcng the deal Google's stock price increased by more than the purchase price and the majority of the purchase was made with stock. YouTube was basically free. So, a free turd with some lawsuits attached to it that throws off tons of cash and gives them market leadership in video, is probably still a valuable turd to have in your pocket.

>mark cuban was right Mark

>mark cuban was right

Mark Cuban is always right, eventually.

>> Mark Cuban is always

>> Mark Cuban is always right, eventually.

Like a stopped clock?

I don't care how you polish it

You could say it was 'free' handing out 1.6 billion worth of stock that could of been used to purchase something else.. but handing part of your company off to buy something that is now facing a huge lawsuit.

It wasn't free... not by any stretch of thought.

You could polish it, you could spray Lysol on it, you could even paint it.. but all you have at the end is a shiny, great smelling, clearcoat turd.

It wasn't free... not by any

It wasn't free... not by any stretch of thought.

Yeah, if you figure the price dropping about 9, that's more than $2.7 billion folks have lost on one small piece of news.

We'll see how it shakes out at the end of the day, but as it opened 5 points down this a.m., I don't envision it coming back that much until later this week.

Why Viacom Could Prevail

Here's an interesting story on why Viacom could prevail.

I thought the Google people

I thought the Google people sold all their shares already(?) It's just public money now.

Anyway the scary part of this is.... if it is a real lawsuit, and it leads to actual legal discussion instead of just more profit sharing to Viacom via a settlement, then this means the non-tech business comunity will tear apart the web business model and recognize where the money is. Everybody will start to understand what has value on the web. As soon as there is no risk, there is no reward.

I think it's a bit premature to cannibalize the market like that, but with Google you never know.

Thats not really a war - just a small skirmish

I'm waiting for one of the major telcos to go up against Google.

Now that woud be interesting.

Yeah but

Now it's a small skirmish just doesn't have the same effect ;)

Took a beating

11.72 at the close, so it's $3.6 billion plus some change down the drain in one day.

This will be settled for far less...

1. It will be nearly impossible for viacom to prove any real damages
2. It will be even more impossible to pin the blame on the content delivery mechanism and not the person who illegally taped, digitized, and uploaded the content (especially considering the glut of YouTube clones).

>> so it's $3.6 billion plus

>> so it's $3.6 billion plus some change down the drain in one day.

Yeah, but the whole market is down too. Trade volume was nothing special. They'll hover around $450 for a while, then post some amazing number at the next quarterly call, and get it all back

Oh, no doubt they'll get it

Oh, no doubt they'll get it back.

200,000,000 setting in escrow

If I recall correctly 200,000,000 of the purchase price was escrowed by Google to cover this exact situation

edited Corrected original post that stated 700,000,000
http://www.sptimes.com/2006/11/15/Business/Google_completes_YouT.shtml

Not clear they can get to Google itself

Even assuming that YouTube's business model relies blatantly on copyright theft, it's not automatic that Viacom gets to collect damages from YouTube's corporate parent, Google. Normally, when a corporation does something bad, you can collect from the corporation, but not from its shareholders - and that's what Google is, a YouTube shareholder. If they can show that Google participated itself in the illegal acts (maybe, but not an obvious gimme) or that they failed to maintain the corporate formalities (damned unlikely), they can pull in Google, but it's a whole lot different from collecting from YouTube, which is unlikely to have a billion in cash lying around. You can safely assume that Google went into the purchase with their eyes open, anticipating this kind of lawsuit, and have done what they can to make it hard for a plaintiff to collect from the Google treasury as opposed to the YouTube treasury.

As for Google delisting Viacom, I'm not seeing why they couldn't do that legally. They aren't any kind of public utility. They can list or delist anyone they want for pretty much any reason they want. The reason they won't is that it would cause them to serve up bad search results, in a very public way, and that would gravely damage the brand. Sometimes the court of public opinion counts a lot more than the court of law.

On the flip side, Viacom might not care that much if Google does delist them. They are fundamentally a cable and broadcast company, not an internet company. People find their revenue producing products through a TV set, not a computer. To the extent they get web traffic, I'm betting it is mostly brand driven and not search driven. I doubt their stock price would move all that much if Google did delist them - which, of course, they won't.

On the damages

While I am no copyright expert, you have to think that Viacom has registered the copyright on all these so that you are talking statutory damages. That's up to $30,000 per copyrighted work infringed, even if there were no actual damages. They are going to have to come up with a lot of different works to build up a billion in damages, but so far as I can tell they don't have to prove that the pirating hurt rather than promoted them.

This isn't really News

Google knew it would happen. They bought YouTube with everyone telling them they are crazy. So they obviously knew it was coming.

>>I thought the Google people sold all their shares already(?) It's just public money now.

Hardly :) - just a tiny bit of the float. From Wikipedia:

Quote:
After the IPO, Google's stock market capitalization rose greatly and the stock price more than quadrupled. On August 19, 2004 the number of shares outstanding was 172.85 million while the "free float" was 19.60 million (which makes 89% held by insiders). In January 2005 the shares outstanding was up 100 million to 273.42 million, 53% of that was held by insiders which made the float 127.70 million (up 110 million shares from the first trading day). The two founders are said to hold almost 30% of the outstanding shares.

Dream case for copyright lawyers

Fairly clear cut too. How fast would Viacom, Fox, Disney or GE react if I started showing their TV shows and movies on my hobby blog for all to see? I'd be shut down in a heartbeat. Google is no different. I'm not surprised Mark Cuban saw this coming, his stuff is trotted out against his will on YouTube as well.

"Worst case for Google, this lawsuit will take years to get through court, and endless appeals"

This is not an option for Google. They look like squatters as long as there is an open question. It's a no brainer in the eyes of public opinion. It's copyright infringement(so says Viacom)and you can't profit off someone elses hard work without consent.

You don't see YouTube offering NBA, NFL or Major League Baseball games on the platform, they know they can't push some people. Soon they will learn who else they can't push. This is only the beginning IMO.
Google is getting its comupence.

Yet to retain counsel?

Just saw this on Googlewatch:

Quote:
Google has requested a 30-day extension to reply to Viacom's complaint because Google has yet to retain counsel...

Link

Let the shirkfest begin... G

Let the shirkfest begin... G will try and spin this out as long as possible. Time is on their side

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