After years of watching Google's market cap soar and the Internet organize itself around Google's search engine findability, Viacom stepped in today and launched a billion dollar lawsuit, citing Google's unauthorized use of Viacom's content.
Blockbuster news...and not surprising, is it? The book publishing industry went nuts 4 years ago when Google's Book Search Project began (where Google digitally scanned and made available for search the complete text of books). Last month, additional royalties were approved to benefit audio creators, piling on more (prohibitive) costs for any radio stations streaming music online.
It was inevitible one of the major media video content creators would step up and say "enough...now pay up". And Viacom (with all its subsidiaries) is the world's biggest.
Good thing Google set aside about $400 million of its $1.65 billion YouTube purchase price to settle these claims (yes, they they were anticipated) but if the Viacom lawsuit it any indication it may get more expensive than that.
What is Google? Ultimately, it's a web navigating tool (or an agent) capitalizing on other people's content. Or, more specifically, other company's content. The public quickly discovered Google serves a valuable function in society.
However, corporate content owners have never happy with it; not only did Google take away some of their own brand buzz, they were also "stealing" content/$$$ (and profiting from that "stealing").
Nevermind that Google's service happened to build a brand new way to connect and interact directly with your customer, including selling, advertising, branding, promoting and sharing.
Last month, after months of negotiation attempts, Viacom decided to partner with upstart Joost instead of approving content-usage on YouTube because no usage/revenue deal could be worked out with Google. So Viacom demanded YouTube pull all Viacom content off the site.
However, Viacom might have a valid point (will the courts agree?). Prior to Google, if you wanted to know what was "happening", Viacom's MTV Network was the place to find out. Once Google became dominant on the web, MTV Networks's lost their grip among younger consumers. It was faster and better just to "Google" it.
Update @ 12noon: So how did Viacom/MTV Networks break the news to its people? Click here.
Google has been the epicenter of new media expansion since the dot com bust of 2000. Traditional media grudgingly accepted the benefit of piggybacking Google to get content found (expanding content to a wider online audience), even if it meant a loss of control over their owned content.
Google's success is simple too big for traditional media's comfort.
According to Reuters:
Media conglomerate Viacom Inc. said on Tuesday that it was suing Google Inc. and its Internet video-sharing site YouTube for more than $1 billion over unauthorized use of its programming online.C|net also has a report on this story here.
The lawsuit, the biggest challenge to date to Google's ambitions to make YouTube into a major vehicle for advertising and entertainment, accuses the Web search leader and its unit of "massive intentional copyright infringement."
Viacom filed the suit with the U.S. District Court for the Southern District of New York, seeking more than $1 billion in damages and an injunction against further violations.
Viacom contends that almost 160,000 unauthorized clips of its programming have been uploaded onto YouTube's site and viewed more than 1.5 billion times.
"YouTube's strategy has been to avoid taking proactive steps to curtail the infringement on its site," Viacom said in a statement. "Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws."
Viacom said its decision to sue Google followed "a great deal of unproductive negotiation" with the company.
The Media Trend Questions: If Google loses the suit, Google should survive...but what "ripple" effect would it have across the Internet? Will Universal NBC, Disney/ABC (and on and on) also set up lawsuits? Could it go class action? Could this lawsuit lead to another dot com bust? Or, is it just the beginning of the next "whole new media world"?
Related FT.com article: Was Google's YouTube buy media overreach?
Meanwhile...: Mark Cuban weighs in with "You Go, Viacom!"
posted by Chris Kennedy @ Tuesday, March 13, 2007,