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.

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