Wednesday, October 18, 2006


Universal is suing video sharing sites. Not YouTube, but sites very much like it.

As people ponder the $1.6bn plus Google paid for YouTube, Universal is weighing in with what are expected to be the first of a number of law suits for alleged copyright infringement.

In the firing line are Grouper Networks and Bolt, which are being accused of using hundreds of music videos of artists such as Mariah Carey, Mary J. Blige, 50 Cent and Black Eyed Peas without permission.

This could be a real problem for the new wave of user-generated content video sites. For while it might be fun to watch quirky little videos, the real business is in content such as music videos which really drive traffic to the sites.

You can see why companies like Universal might be unhappy. They invest in artists, make music videos, and then sites which they have no stake in and gain nothing from make money out of their efforts.

"User-generated sites like Grouper and Bolt that derive so much of their value from the traffic that our videos, recordings and songs generate cannot reasonably expect to build their business on the backs of our content and the hard work of our artists and songwriters, without permission and without in any way compensating the content creators," a Universal spokesman said.

The move had an immediate effect as Bolt media president Jay Gould posted a message on the New York-based company's website asking users to refrain from uploading copyrighted music videos.

"We understand the love you have for your favourite musical artists," Gould wrote, "but Bolt respects rights of copyright owners such as Universal Music and their artists."

But Grouper CEO Josh Felser was upbeat and said he expected to win the lawsuit.

There was much talk prior to the sale of YouTube of legal trouble ahead.

Dotcom billionaire investor Mark Cuban predicting that YouTube will be "sued into oblivion" on the back of copyright violations.

"They are just breaking the law. The only reason it hasn't been sued yet is because there is nobody with big money to sue."

Analysts had predicted a flood of copyright lawsuits against UGC and social media sites, with some observers saying media companies will probably target several of YouTube's smaller competitors to establish a legal precedent before taking on YouTube itself.

If they can win some judgments saying these sites are not protected then music publishers will have all they need.

According to Cuban: "They [will] have all the leverage in the world to dictate licensing terms to sites that until now have not proactively enforced copyright but have instead chosen to rely on rights holders' takedown notices."

Like YouTube, Grouper allows people watch, share and create videos for the web. It is owned by Sony Pictures Entertainment, which paid $65m for the online video site in August.

I'm sure they'll come to a deal. It is all about being able to monetise the content and share that effectively with the owners of the content. Sites like Grouper and YouTube have the traffic and are making money, now they just need to share it.

And that is already starting to happen. Last month YouTube signed a deal with Warner Music Group to share revenue from online ads that appear on its site alongside uploaded Warner music videos. The agreement also applies to consumer-created content featuring Warner-owned music.


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