More documents made public in Viacom v YouTube

By | Published on Wednesday 26 May 2010

More documents have been made public in the ongoing Viacom v YouTube litigation.

As much previously reported, MTV owners Viacom are suing YouTube for a billion dollars over allegations of copyright infringement. They allege that the video sharing service deliberately allowed clips of Viacom content to be uploaded to its website in its early days in business, because they knew hosting such content generated all important traffic.

The lawsuit, originally launched in 2007, only applies to Viacom content hosted by YouTube prior to 2008, ie before the by that time Google-owned service instigated its proper system for taking down and blocking content not cleared for streaming by its owner.

The latest documents show that there were efforts on Google’s part shortly after Viacom began its legal proceedings to reach an out of court settlement. Despite YouTube being rampant with unlicensed content in its early days (infringing content that Viacom allege YouTube bosses deliberately turned a blind eye to), the video service has generally circumvented other litigation from high profile copyright, owners whose content was illegally uploaded, by agreeing to generous licensing deals with said content owning companies. All four major record companies signed such deals.

According to the new documents, Google offered Viacom $592 million in guaranteed income if they signed a licensing deal that presumably involved writing off any claims over past infringement. It’s thought Viacom were open to the deal but were pushing for $700 million. For whatever reason, possibly price, no deal was reached.

Also among the new documents is an internal correspondence from Google from shortly after they acquired YouTube, in which an insider allegedly admits that Viacom’s content was the “most valuable” on the video-sharing site in terms of attracting traffic.

That revelation follows the unearthing of other earlier documents from within YouTube that seem to back allegations that the site’s founders deliberately turned a blind eye to infringement (and, in the case of one founder, uploaded infringing content himself) to boost traffic, so to boost the asking price when the inevitable takeover deal landed on the table. Google subsequently bought YouTube for $1.65 billion.

When Viacom originally sued YouTube, it seemed they genuinely wanted to hinder the development of the video service, it being such a big threat to their youth-centric MTV services. YouTube have even accused Viacom of pursuing their litigation out of sour grapes, because they had been considering making a bid for the video site prior to Google’s audacious takeover.

But given YouTube now operates a take-down system for infringing content which most people believe satisfies their obligations under at least US copyright law, even a total court win for Viacom wouldn’t really affect the video site’s current operations.

However, Viacom are probably still motivated to continue with their litigation not just out of a desire to win multi-million dollar damages, but also on a point of principle. If you believe, as Viacom seem to, that YouTube’s founders had a short-term strategy of actively enabling and encouraging rampant copyright infringement in a simple bid to build market share and therefore up the asking price when they sold out to a bigger corporate player, then a court win for the MTV company could set an important precedent.

If Google end up liable for billion dollar damages based on the alleged infringing activities of YouTube’s founders, then that will make other corporates and investment types nervous in buying up future web businesses which have considerable market share, but which have won that market share by enabling or turning a blind eye to copyright infringement. In turn making digital products that enable infringement of some kind less attractive to web entrepreneurs primarily motivated by the big bucks that can be made in a corporate sell out.