Viacom Tries to Play Hardball With GooTube

After not getting its way in negotiations with YouTube (details, anyone?), Viacom has demanded that YouTube remove 100,000 unauthorized Viacom clips.  Although this is probably little more than another negotiating tactic (like the preposterous idea floated a few months ago about the creation of a Big Media YouTube Clone), it will be interesting to see how it plays out.

YouTube could presumably argue that, legally, it is not responsible for what individuals choose to upload (as long as its user-agreements make clear that they aren't allowed to upload pirated clips).  Unlike the file-sharing start-up-of-the-month, moreover, YouTube has the resources to make sure that a court battle drags on for years--at which point Viacom and every other network will probably be paying YouTube for distribution rather than the other way around.

Viacom presumably knows at least the first part of this (and is presumably in denial about the possibility of the "one day we'll be paying YouTube for distribution" part).  So one wonders just how far it will go to force YouTube to remove all the offending content.  And in the meantime, of course, it will sacrifice the promotion, revenue, and viewer goodwill that it would have gotten had it found a way to agree to play ball.

As for YouTube, meanwhile, one wonders whether content removal can be automated--a simple search and delete?--or whether the company will have to hire an airplane hangar full of full-time censors.  Either way, even though the Viacom content is reportedly among the site's most popular, YouTube will obviously do just fine without it.  In the world of video clips, Viacom's just a bit player.

UPDATE

YouTube caved.  Which means Viacom's clip library will now be less valuable than it would otherwise be (even with no revenue share, the clips no doubt generated some brand value, user familiarity, advertising, etc.)  For the sake of users, let's hope the two parties soon kiss and make up.

Anyone know the details of how YouTube removes 100,000 files in one go?  Automated or by hand?

Comments

[DonDodge]

This is very difficult to do in a comprehensive way. I was VP of product development at Napster when the RIAA and Federal judge asked us to filter out all copyrighted music. It was difficult with music...it will be nearly impossible for video.

The problem is completeness. You can put together hashing algorithms and "finger printing" techniques to find the obvious stuff...maybe 80% of teh copyrighted content. The remaining 20% is nearly impossible to identify with precision and completeness.

The judge in the Napster case demanded 100% compliance, not 90% or 95%...100%. There was no way to effectively do it so the judge just shut Napster down.

The truth is that Viacom probably couldn't provide a 100% accurate list of their clips either.

This could get ugly.

For a look at the inside story of Napster read my blog post http://dondodge.typepad.com/the_next_big_thing/2005/10/napster_the_ins.html

Don Dodge

[DonDodge]

Oh, to more directly answer your question, YouTube can probably remove 80% of the clips in an automated fashion using a hash or "finger print". The remaining 20% will require lots of hand work.

Then the users will get very clever in disguising the clips with different names, tags, sample rates, lengths, etc.

They better go for a negotiated settlement because 100% compliance now, and going forward, will be nearly impossible.

[Henry Blodget]

Thanks, Don. Very helpful.

[sufiy]

Will it be the trigger to break base of Recent Double Top at 450? Very interesting angle on YouTube Deal:

http://sufiy.blogspot.com/2007/02/google-youtube-deal-very-interesting.html

[Bjorn]

You can't trick millions of users, they'll subvert whatever tactic you have because as many bright minds you might have hired with six figure salaries, you've got a world full of people you're trying to contain. I bet that from this day on forward I will be able to find Viacomm intellectual property on YouTube within 5 quick searches or less.

[Victor]

To elaborate on Don's answer: people can modify their clips slightly so their digital fingerprints are different to the original. One way to get around this is to split the video into small pieces and fingerprint each piece. Then you can say two videos are the same if they have a large fraction of fingerprints in common. Another thing you can do is split the video into audio and video and fingerprint those separately.
Unfortunately for youtube, someone is probably going to invent technology that will take a video and modify it completely so that fingerprints won't work, but the video will remain indistinguishable from the original.

[Neal S. Lachman]

YouTube (thus Google) should realize that it is nothing more than what Napster ever was. The fact that these guys have streaming video at the core of their businessmodel (what businessmodel anyway?) is their biggest threat.

From a user's perspective YouTube is fun, but because there's a lot of clutter and carbage or outright crap) the site will get less and less attractive.

I also believe that YouTube will get more and more trouble with the likes of Viacom. Google didn't capitulate, it made an arrogant call... by not coming to terms with Viacom earlier. This may be the beginning of the end for YouTube.

[Neal S. Lachman]

"... Viacom's clip library will now be much less valuable than it would otherwise be (even with no revenue share, the clips no doubt generated some brand value, user familiarity, advertising, etc.)"

I don't think so. YouTube has absolutely no added value to content (shows, series etc.) as long as there is no pinpoint marketing scheme behind it. The audience at YouTube is too fragmented and not easy to track. I am not sure whether media buyers have been counting on exposure on YouTube. And in case you are forgetting, I want to point out that MTV is part of Viacom, the audience of which has been valuable to media buyers since decades. I don't see YouTube getting that kind of dedicated audiences in the foreseeable future.

I disagree with your statement that "it doesn't matter". I believe that Viacom content was and would be a boon to YouTube, and now that it's gone YouTube has to make up for its loss, whether you believe it or not.

Most of UGC on YouTube (and everywhere else) that tries to reach an audience can be categorized under "crap". I checked out the comments on some videos, and it amazes me how often the youth writes "I just wasted 2 minutes of my life". The majority of quality content comes from Big Media, and that's the source Google/YouTube is killing. Great way to go for a business.

I think Google should keep it's information-organizer hat on, and keep playing the search game if it can't play the video-content game.

[walt]

Amazing in this day and age that media video clips are unavailable.
I search for recent sporting event clips - virtually nothing available. WHY?
It isn't like those clips are being sold somewhere else - or generating revenue.
The owners of the clips can generate advertising revenue as well as brand awareness via the likes of youtube.
Something is wrong somewhere. Maybe because youtube started off shunning advertising and thus has never been a means for anyone to generate revenue!
The problem with youtube from my viewpoint is there is too much crap on it and I can't find anything I'm looking for.

[sufiy]

I have already wrote about Slowing Growth, MC/FCF=95 against Yahoo!'s 28.9, falling Operational cash flow by 9% in Q4 over Q3, saturation point in traffic with Down Trend, Technical Damage, trimming of CAPEX to save Free Cash Flow which is barely flat, but everybody was exited about Earnings and how they "beat" the street. Another surprise here: 13% "Efficient Tax rate" was very handy this Q they have reported EPS 3.29. If we will read ER we will find out that Income before income tax was 1184733, we will apply stated by Google 26% Tax (which is also rather interesting rate) and so normalise tax rate within the year without One Time Benefit due to deal with IRS (they call it "APA" :"Our effective tax rate will be greater in 2007 under the APA than it would have been without it." Surprise, Never Sacrify Party for Tomorrow's Morning.) In plane English if this One Time benefit would not happen now Earnings will be ONLY 1184733*(1-0.26)=876.702 mln USD against 313459 mln shares with Q4 EPS=2.80! way below Street expectations.

http://sufiy.blogspot.com/2007/02/i-hope-you-have-already-get-idea-what.html

[Nemo]

Quote:

"even with no revenue share, the clips no doubt generated some brand value, user familiarity, advertising, etc.)"

Eh?

I go to a site and look at ripped-off stuff for free, and this generates "brand value"?

Like buying a rip-off Rolex generates brand value for Rolex? It's a solid comparison, since the YouTube videos of Viacom shows are in no way comparable to the actual quality of a Comedy Central DVD, for example.

This comment from YouTube sums up the stupidity of this view for me: "big corporations are never going to get the message. the only thing they care about is money, and as long as people are watching all their shows for free, they aint getting any." (Comment from superfrodies on "Message to Viacom": http://www.youtube.com/watch?v=pvvXevaZik0.)

Well, quite.

[Henry Blodget]

I think a clip of Jon Stewart emailed around the web and watched by millions of viewers serves as effective advertising / positive reinforcement for the show. Of course the quality is not the same as watching on a 54" HDTV, but the quality in this case isn't the point.

Over time, information about what YouTube users watch, what they like, what they don't like, what resonates, what doesn't, the ability to send similar clips to previous users, the ability to monetize clips and shows that are otherwise entirely sunk cost, etc., will likely become more and more valuable to content producers. I agree with Jeff Jarvis that, in this case, Viacom is cutting off its nose to spite its face.

The old television and content models are, for all intents and purposes, done. Viacom can either ignore that (the head in the sand approach) or find a way to roll with it. If Google is to be taken at its word, it is not yet generating much revenue from the Viacom clips, and Viacom is almost certainly not losing many TV viewers because of them. So, at this stage of the game, it seems senseless not to find a way to play along.

Unless what you're really doing is negotiating--which is probably what is really going on here.

[Phil Russell]

I also believe that YouTube will get more and more trouble with the likes of Viacom. Google didn't capitulate, it made an arrogant call... by not coming to terms with Viacom earlier. This may be the beginning of the end for YouTube.
******************
Nope. YouTube is now going to start sharing advertising revenue with the creators of the most popular vidoes. This will drive membership numbers through the roof and make viacom and official media companies even more bit players than they are already.

[fmk]

a single clip of john stewart might be a good viral way to build / reinforce brand awareness, but knowing that vitually the full show (or certainly the best bits from it) will be YouTubed within hours of airing ... well that just means i don't have to watch it on my telly and can watch it on YouTube instead. and that damagaes the station broadcasting the show.

[Tricky]

Does this wiff of mp3's 5 years ago? and now look where we are. the big corporations can sit in the dark ages - or they could embrace the technology and give users what they want... it will happen sooner or later and someone will make a lot of money out of it.

[Jeff]

To paraphrase Mark Twain, predictions of YouTube's death are greatly exaggerated.

The notion that its dispute with Viacom signals the beginning of the end for YouTude couldn't be more wrong. If anything, it only signals the end of the beginning.

A business model is evolving, as evidenced by YouTube's ad revenue sharing with creators of popular videos. Eventually, that will include Big Media after another cycle of torturous negotiations.

Those millions of folks who use YouTube every day belie the notion--expressed by 2 commentators--that it is filled with crap. One person's garbage is another's art, silliness, ranting or self-promotion.

The idea that "YouTube has absolutely no added value to content (shows, series etc.) as long as there is no pinpoint marketing scheme behind it" is again belied by its usage. There is a huge community of users who do see value. Some of it is the value of content (e.g., all those self-made videos). Much of it is the value of an online community. Like any big commmunity, motivations are mixed among users. And yes, for some the value is an a marketing channel -- not "pinpoint" marketing, but more viral marketing.

Anyone who believes that Viacom and Big Media, by sitting on the sidelines, will sink YouTube is living in yesterday, peddling yesterday's business models.

As with Napster, the issue is not YouTube. It's P2P. Napster's death only hastened the development of BitTorrent and other more distributed P2P technologies. It did not reduce the number of people using P2P.

This genie is out of the bottle. Oh, and there is no bottle ... it's a network.

[Robert]

Henry,
You and others discussed the legal ramifications of Google's purchase of
YouTube well before the deal was finalized. Can anyone honestly say that
Google paid no attention to the copyright issue BEFORE the transaction. Do you
really believe that Sumner Redstone at 83 understands the Internet. What has
Viacom/CBS stocks done in the last 8 years?
C'mon guys, these are very smart guys at Google. Give them a chance, a few months at least.
Henry, I remember your writing that this purchase was but 1 % of Goog's valuation.
And some are condemning the company because they are taking a shot with one percent
of their valuation.
I guess Google and other start-ups will always draw naysayers...like you N---.
The company in its 8th year just made over 1 Billiion dollars in a quarter.

[Rick Schettino]

This is a replay of what happened when music got a foothold on the web. Wondering how it's going to pan out? As below, so above, as they say.

The studios and distributors are going to battle it out. The studios are going to win the first round. Then YouTube will charge for access to the material since they cannot stop it from being uploaded.

Meanwhile Apple puts great minds on the the real solutions. By connecting YouTube to the Boobtoob (via Apple TV), Apple and other players are going to be dishing out much of the media that the networks and cable companies are now, and power will continue to shift from the old players to the new players. Quality will improve and people will be willing to pay something for it.

Also see Apple Corps vs. Apple. Apple Computer basically today announced that they bought the trademark from the Beatles and rumor is that it includes having The Beatles' music on iTunes. Apple and Google and "co-defendants" are just going to have to buy the labels and Studios like Sony did back in 20th century history (for other reasons).

[Neal S. Lachman]

I see people responding to my comments. But I think I know what I am talking about. Ever since 1996 I have been a proponent of UGC and on-demand or interactive programming, this was years before the technologies became widely available. There are interviews with the Dutch media (1998) wherein I have stated that companies will use the Internet to promote and share videos. However, I really don't think that there is a massive opportunity in sharing revenues with its amateur users. It may be part of a business, but it doesn't make the whole case.

The supply of quality content by a producer-base may not be enough to sustain a business. The real quality on YouTube will mostly come from pros and dedicated people (who make a living out of content production). If YouTube is going to reward its amateur or semi-professional producer for questionable quality content, why should YouTube not share revenues with Big Media?

If YouTube starts to pay (or share revenues with) Big Media for the display of their content, a huge part of its businessmodel falls into place. This way YouTube will have the best of both worlds... pros and amateurs.

What YouTube is doing is great -it is enabling people to watch videoclips-, but the quality isn't great - qua connectivity (because of the buffering and streaming of the content at today's mediocre speeds) as well as qua content. These are two shortcomings of YouTube that won't be easily solved, and which will haunt them.

I really think YouTube is today's fad (and for a few more months), then a smarter group of guys will come up with something better and with a more interesting businessmodel and with a guaranteed supply of quality content. Hmmm, maybe Big Media should organize a competitor to YouTube, what say, Henry?

[Neal S. Lachman]

Robert,

My name is Neal, not N---, thank you.

I am not a naysayer to Google. Get your facts straight. I just think that Google should more focus on its core-business- search. Of course, I understand Google's bottomline... they don't care how and for what, as long as the audience keeps coming back, because then these eyeballs will catch the ads and click-throughs will happen. But this doesn't take away the fact that quality should prevail on YouTube.

And FYI, I have invested in start-ups for the greater part of my life. Don't try to judge me by a few words, which you are misunderstanding and misinterpreting anyway, R-----! ;-)

[Mr. B. Wilson]

Quality of video is not a big deal to YouTube users.

Last week I heard Gates was going to be on the Daily Show. I forgot to DVR the Show. I went on YouTube the next day and caught the clip. Did I care that the clip looked liked someone recorded the show with a CAMERA, all distorted, with an echo effect on the sound. No it did not matter to me. For a 9 minute clip, I saw what I needed and got a good laugh. And I watched it in a 4 inch little box, not my 42 inch plasma. I didn't care.

The public will put up with poor quality if they get what they want. Look how lousy cell phone reception is and how Cingular says, "we have dropped calls, just fewer than the other guys." If you want quality, you use a land line. If people want quality, they will pay more for it.

How about MP3's, these are encoded bits of music that actually remove the quality of the music so they can be compressed into files. Do people care that the music does not sound as good as if they were listening to a CD? No, they are listening to the music with cheap earphones with a ton of outside noise or listening in their car stereo trying to hear the music over their engine and wind noise. If people want quality, they will buy a CD, not download a cheap mp3.

Personally, I think people have been giving up quality products to get what is fast and cheap. Who stops to smell the roses anymore?

YouTube could give monetize the Viacom business (providing they have to pay up) by going the cheap route and the quality route. Charge 25 cents for the crappy recording and charge a buck for a clean, clear nice sounding clip.

I know what I would pay. And probably millions of others would do the same.

Quality be damned!

[walt]

A couple of people mentioned youtube revenue sharing with amateur content yet also suggested Viacom was out of touch by demanding the same for professionally produced content!
Out of touch should have been self-directed.
And death of youtube? Who said that? As long as revenue doesn't matter, youtube can last forever. But if they want to be relevent in the future they will have to figure out how to generate revenue for themselves AND the content producers. Because if not, someone else most assuredly will!

[Neal S. Lachman]

Great article:

Viacom's High-Stakes Duel with Google

http://www.businessweek.com/technology/content/feb2007/tc20070202_568443.htm?campaign_id=rss_tech

[Jeff]

Anyone want to wager that what is happening with music [Note Steve Jobs' public push for DRM-free music online] will eventually happen with video?

... Meaning, eventually, it's hard for content companies to convince hundreds of millions of consumers that they don't want what they clearly do want: fully portable, share-able, searchable music and video.

[misha]

What if Google doesn't care about the lawsuits? Or, even the $1.6B expense? (Parenthetically, when the performance markers and lawsuit contingencies are factored out, I bet the deal is much less than the sticker price.)

I don't speak from any inside information, but I believe that they are trying to stake out their position in the video search advertising world. This doesn't need to be just for the Net. TV has the biggest pot of advertising money. If Google can demonstrate its ability to provide targeted video ads, this skill can easily be used in TV. And, maybe next, magazines.

Google makes its money from ads. It's better than everybody else because it can get these ads to the right audience. Why not make a splash--buy the most recognized group out there, youtube, for an enormous sum--and then show the world your video search capabilities? Then, you can leverage this skill when you sell the video search (and the ads) to TV and other digital video broadcasters.

$1.6B to get in the game is nothing. Maybe all the lawsuit stuff isn't much more than smoke to distract people from the bigger picture.

Maybe that's too simplistic, but it's a theory...