Monthly Archives: May 2010

YouTube – Winning the online video battle, but will it lose the War?

YouTube, the world’s most popular video website, celebrated its fifth birthday this month, claiming that it now attracts around 2 billion visits per day. Even if this figure may not hold up to detailed scrutiny (other estimates suggest that the figure may be closer to around 500 million per day), YouTube, bought by Google for around £1.2 Billion in 2006 has led the way in the growth of online video as a medium and been at the forefront of the social media revolution.

The site’s business model has become more refined since launch, now operating in a similar way to Google’s “Adword” service by relying on advertising income to generate profits through selling “keywords” to content owners so that their videos appear at the tope of search results, embedding advertisements into clips and exploring the possibility of allowing content providers to charge users for access to their work.

However, even in the face of such positive publicity and having become an indelible part of 21st-century culture, YouTube is not yet a profitable business. It is likely to become one later this year, but its future may depend upon the outcome of a bitter and long drawn-out copyright dispute with Viacom, one of the world’s largest media conglomerates and owner of high-value brands such as Paramount, MTV, VH1, Comedy Central and Nickelodeon.

YouTube was one of the first and remains one of the leading exponents of the use of user-generated content (“UGC”) online and originally started life as a means for individual users to host their own videos, many of which were clips of family and friends. In that case, the owners of any copyright in the video would almost always be the “Director”  – whoever is responsible for making the arrangements for making it in the first place (which in most cases would be the person who filmed it).

It was only a matter of time, however, before the nature of the content available on YouTube began to change. As the site became phenomenally popular (according to some statistics, in the top 5 most-visited sites on the web), its users began to post all kinds of video content and the site first ran into trouble when users began to post content which belonged to Movie and TV Studios and record companies.

The Entertainment Industry has been fighting a long-running battle with YouTube since its launch to ensure that videos which belong to their members are not posted without permission and, more importantly, without them receiving a royalty.

Users have taken to posting entire movies, every episode of TV series and whole albums by a wide range of major label  studios and artists to share with their friends and/or comment on what they post. Posting that content without consent from the copyright owner is an infringement of copyright. YouTube then becomes part of the wider problem by copying the material onto its server and making it available to the public. This makes them every bit as liable for infringement as the original uploader.

The damages which a Court will normally award for an infringement of this nature would be the royalty which would normally be charged for licensing the content in question or an account of the profits generated by the infringement. In YouTube’s case, that figure could be very significant.

Shortly after its launch, the Entertainment Industry lined up to take on YouTube, with Viacom at the front of the queue. The studio sent well over 10,000 notices to YouTube to remove their content and in March 2007 sued Google for $1 Billion after entire series of their most popular TV shows showed up on the site.

The dispute has rumbled on ever since then, and is making slow progress towards a trial. Viacom argue that YouTube’s business model depends upon large-scale copyright infringement and Google have claimed on a number of occasions that Viacom have leaked their own material onto the site to support their case. Since the claim began YouTube have introduced the “VideoID” System, which checks content being uploaded against a database of copyright-protected material.

YouTube does carry a disclaimer advising its users not to post TV shows, music videos, concert footage or commercials unless they were created entirely by the user. Despite this, however, a huge amount of unauthorised video still remains on the site, leading to a number of agreements being put in place with content owners such as Disney which saw their content being posted in an “official” capacity on the site in exchange for a royalty payment and advertisements.

The YouTube/Viacom case could well prove to be an important milestone in the development of entertainment over the internet. Since the Internet first came to real public prominence in 1996 up until the Napster case in 2000, the sharing of copyright-protected content online was seen as an unmanageable problem. Since then, a number of decisions have shown that the attitude of the Court is beginning to change.

In particular the Recording Industry Association of America has taken aggressive action against infringers, including the highly-publicised case involving Jammie Thomas-Rassett, a single mother found liable for copyright infringement in the US and ordered to pay over £150,000 in damages for downloading 24 specific songs (although she had a history of downloading over 1,000).

This is not a trend which we can ignore. The UK’s Entertainment Industry has been similarly vocal on the threat that Copyright Infringement poses to their business and lobbied the Government for several years to take steps to deal with the problem, ultimately leading to the introduction of the highly-controversial and rights owner friendly Digital Economy Act 2010, which for the first time places obligations on internet service providers to provide “copyright infringement lists” to content owners and contains the power to limit access to the internet for alleged infringers.

Even if the Digital Economy Act is ultimately repealed by the new Coalition Government (as promised by both Nick Clegg and David Cameron), the UK Courts are already beginning to make their position on copyright infringement over the web abundantly clear.

Even though Alan Ellis, the creator of file-sharing site “Oink” was found not guilty of criminal copyright infringement in January 2010, the Motion Picture Association of America were successful in a civil copyright claim against search site Newzbin in the UK High Court in March of this year.

Newzbin described itself as a “search site” which simply allowed its users to find infringing content, but the MPAA successfully claimed that the way in which Newzbin worked (by showing its users where to find individual parts of larger files over Usenet) amounted to authorising its members to infringe copyright, and therefore infringing in its own right. The case was seen as a major victory for the entertainment industries, with the MPAA’s European Spokesman describing the site as “a source of immense damage to the creative sector in the UK and worldwide.”

So back to YouTube. Having established that the UK Court would probably decide the case in Viacom’s favour, what’s at stake? For Google, it’s a large percentage of their profits and for the web in general it’s the possibility that every piece of content would need to be reviewed before being posted online to ensure that it did not infringe copyright, which most sites would simply be unable to do. For Viacom, it’s a large amount of revenue lost from syndication, licensing and DVD sales as well as the ability to charge for the online distribution of their content.

The key question in the American Court will be whether YouTube had specific knowledge of the clips in question being infringements. Ultimately, this question will be decided by a Judge but for now we can only wait with baited breath for what will be a landmark decision on the future of entertainment over the Internet and probably the defining statement on how the industry can operate in an environment which allows their content to be copied and distributed around the world almost immediately.  Notably, file-sharing site LimeWire was earlier this week found liable for copyright infringement and may well be forced offline.

The World Wide Web will, in all probability, not remain the legal “Wild West” for long and the ultimate question may well be whether YouTube can continue to be as successful if infringing content is removed.

The Explosion of Social Media – Twitter Bomb Hoax prosecution leads to fine

In what is believed to be the first case of its kind and a salient warning on the dangers of “tweeting first and thinking later”, Trainee Accountant Paul Chambers was convicted by Doncaster Magistrates’ Court yesterday of the relatively new offence of “improper use of a public electronic communications network” after posting a comment on Twitter threatening to “blow up” Robin Hood Airport in South Yorkshire.

In what was described as “a moment of frustration”, Chambers posted the offending tweet on 6 January 2010 after being unable to travel due to heavy snow – “Robin Hood Airport is closed. You’ve got a week and a bit to get your sh– together, otherwise I’m blowing the airport sky high!”

The message only came to the attention of the Airport’s Security Team after a routine search of the site a few days later. Although the threat was deemed to be “not credible”, it was passed on to Special Branch and Chambers was arrested at his workplace shortly thereafter.

Chambers’ defence team argued that he only intended the message to be seen by his 600 followers and did not expect it to appear in the site’s Public Timeline, especially when Twitter features an average of 600 messages per second. Despite an apology for his behaviour and evidence to demonstrate Chambers’ general tone of postings on Twitter, District Judge Jonathan Bennett found him guilty of the offence of Improper Use of a Public Electronic Communications Network under Section 127 of the Telecommunications Act 2003.

Chambers was fined £385 and ordered to pay £600 costs, with the District Judge describing the post as “of a menacing nature in the context of the times in which we live” The conviction comes a day after Twitter was hit by a security issue which saw entire lists of followers deleted.

The advent of social media and Web 2.0 technologies and platforms such as Twitter and other social networks now allow virtually any user to post content and opinion in real time. Whilst this means that there is now a real democracy in opinion available to the public rather than the previous promotion of content created by a few major outlets, it also means that the content in question can be viewed by a much larger (and perhaps unintended) audience, in this case the security staff at Robin Hood Airport and ultimately the Police.

Chambers’ conviction was for an offence under Section 127 of the 2003 Act, which prohibits sending a message or other matter over a “Public Telecommunications Network” (which includes Twitter) that is “grossly offensive or of an indecent, obscene or menacing character”. The offence has rarely been used since its introduction, with this being by far the most high-profile case due to the fact that it raised real concerns over the use of the Section 127 Offence as opposed to the existing offence of communication of a bomb hoax under Section 51 (2) of the Criminal Law Act 1977.

The Offence under the 1977 Act requires the “intention of inducing…in any other person a false belief that a bomb or other thing liable to explode or ignite is present in any place or location whatsoever”. Demonstrating that intention and securing a conviction is not an easy task for a prosecutor, whereas the Section 127 offence under the 2003 Act only requires that the message was “menacing”, which was argued in this case.

Notably, Chambers was originally arrested under the 1977 Act. The Section 127 Offence was originally designed to deal with threatening telephone calls and appears to have been used selectively to fit the facts in this case when another more suitable offence is available which contains the necessity for intent and as such provides some protection for Defendants. Whilst it’s hard to argue that it would have a “chilling effect” upon social media, the offence is potentially open to misuse as many claim is the case here.

This case is a cautionary tale to any Twitter user that in the tense times in which we live where the internet is being very actively monitored for potential threats to national security or content involving terrorist activity, what seems like a harmless joke when sent may well lead to very serious consequences.

The only evidence that would not be potentially unreliable at any trial would be the tweet itself, which can be used just like any other piece of information. Not everyone in your social network will always share your sense of humour and your audience may include the Police. The online world is subject to the same legal principles as the real world, which users can sometimes forget.

Unfair Play? Sony sued over removal of “Install other O/S” feature from PS3

Entertainment giant Sony have been sued for over $5 Million by a disgruntled gamer after removing the “install other OS” feature from their market-dominating PlayStation 3 console.

The feature allowed users of the console to install the widely used and very popular Linux operating system, which could effectively turn the PS3 into a home computer rather than an entertainment system, a feature which was touted prominently in Sony’s marketing when the console was launched in 2007.

Following the removal of the feature due to security concerns earlier this month, California resident Anthony Ventura has launched a class action claim against Sony on behalf of “a nationwide class of all persons who purchased a PS3 during the period November 17, 2006 and March 27, 2010 and who did not resell their PS3”, describing the removal of the feature as “based on its own interest and made at the expense of its customers”.

Many gamers may not have noticed the removal of the feature, but to the hardcore PS3 user who intends to use the console beyond its obvious gaming and entertainment capabilities, the move was extremely controversial. However, it was probably only a matter of time before Sony took this step as a part of their ongoing efforts to curb piracy through digital rights management.

The use of Linux as an operating system effectively allowed PS3 users to modify the console as and when they saw fit. Amazon in the UK have already made a number of refunds to disgruntled customers who have complained that it no longer works in the same way it was advertised when purchased, although Sony have already ruled out such a move.

Under UK Law (the Sale of Goods Act 1979), consumers are fairly well-protected and sellers must provide goods which meet certain minimum standards, the main being that what is being sold must “correspond with their description”, be “fit for purpose” and “of satisfactory quality” at the time of purchase. Consumers expecting a certain functionality from the PS3 may well have valid claims, although there may well be an equally valid defence on the basis that the PS3 remains fit for purpose on the basis for which it is commonly supplied (i.e. as a gaming console rather than a home computer) and that it was of satisfactory quality in terms of “all relevant circumstances”, again to be used as a games console.

It’s probably fair to say that this claim would be dealt with differently in the EU than the US and it is worth noting that the feature is only removed through a downloadable firmware update. Although any user refusing to update their console could still use Linux, they would not be able to use other features, such as playback of certain Blu-Ray discs.

It may well be that Sony is willing to risk a flood of similar claims against the potentially huge amount it could lose through the use of modified consoles to circumvent their DRM system in the wake of the announcement of an available “hack” for the system in January this year by the same user who successfully cracked the iPhone. In the battle for copyright protection, it may well be the informed gamer who ends up as the loser.