Google Buys the Future of Copyright

Posting has been light the past few days as I’ve been trying to digest Google’s YouTube buyout and what it all means in a larger context. I’m still not certain about where I stand in the “good idea/bad idea” debate, but after reading more about it and looking at the online landscape I’m leaning much more towards the former. I’ve read the opinions of many people who I respect and have tried to explore this issue in greater depth.

Jeremy (Shoemoney) posted his ten reasons why the GooTube buyout makes sense and I agree with many of his points. Quadzilla has called it the most significant internet acquisition of the decade. It seems that online marketers have a better grasp on why this deal works and why it’s so significant.

The arguments against YouTube seem to center around three issues: bandwidth costs, monetization model, and copyright infringement problems.

Hosting Costs

YouTube’s bandwidth costs are reportedly over $1M/month. Google has all the bandwidth in the world so this will be a wash. Not much else to say there.

Monetization Model

Google already has AdSense stats from YouTube AND they’ve experimented with video advertising this year so they have the numbers and know what kind of money can be made. But these all seem like short term questions, which pale in comparison to what the real long term goals are – to be the dominant player in the online video market (which will explode in the years to come).

Copyright Infringement

Most people do not understand copyright law. This is further complicated by the fact that no laws have been written in response to all these newly emergent technologies and newly created uses of such technologies. This is a new frontier.

Contrary to what some may think, YouTube is actually in the clear with respect to existing laws and precedents. Read John Batelle’s recent interview of Fred von Lohman to get a better understanding of this.

There is a different safe harbor for each of the following activities: providing network access (e.g., your ISP), caching, storing material on behalf of uses (e.g., web hosting), and providing information location tools (e.g., search engines and linking).

YouTube’s founders have been smart enough to get themselves on solid legal footing. The Digital Millennium Copyright Act (DMCA) and many cases thereafter have carved out exceptions for ISP’s to allow for fair use. YouTube has taken the necessary steps and precautions to make sure they comply with the requirements of these exceptions.

Which leads us to… as of yet unwritten law and undecided cases governing fair use, DMCA, and copyright infringement. Google wants to fight this fight.

…better to choose your battles and plan for them, rather than fleeing the fight and letting some other company create bad precedents that will haunt you later. (von Lohman)

Online video is still in its infancy. Google now is the dominant player in this space (and has the largest pockets). Larger companies like Universal Music Group and Sony BMG have been striking deals with YouTube because they would rather monetize the online video market than get involved in a lengthy legal battle, which they may end up losing anyway. The smaller players that end up suing Google (this will happen, I have no doubt) will most likely lose because they won’t have the legal firepower to stand up to what can very reasonably be argued as fair use. Once they do lose they will create precedents that will only strengthen Google’s legal foothold.

In essence, Google has bought the copyright fight in the burgeoning online video market, a fight they are likely to win.