YouTube: Why Google fears $1 billion Unsafe Harbor

Using the leverage of the Internet, YouTube appropriates the value of creative content on a massive scale for YouTube’s benefit without payment or license, so says Viacom’s $1 billion civil “complaint” against (now) Defendant Google.

Is Viacom off the mark? Google CEO Eric Schmidt, in fact, espouses a similar characterization of the YouTube business model.

In “YouTube: What Google CEO Eric Schmidt really thinks,” I put forth Schmidt’s recently expressed belief in the invincibility of YouTube’s popularity and its model:

Google begins its YouTube pitch to media content owners with an almost ultimatum: Users are going to make copies of your copyright content, so you may as well get used to it and embrace it.

Is Google oblivious to copyright ownership rights then? Of course not, Schmidt is careful to note, by referencing what it deems to be the Google and YouTube rights to host any videos it wants to, thanks to the DMCA. What about the Google YouTube “Claim Your Content” plan, is it a copyright protection program? Think of it more as a fast-track to DMCA takedowns, Schmidt suggests.

Schmidt advises that video content companies make it even easier for “fans” to use unauthorized copyright content uploads, instead of trying to deprive them of the content they are “fanatics” about. What will the video content owners really get out of their “fans” exploiting unauthorized uploads of their copyright content? That is still “unclear,” Schmidt acknowledges.

Schmidt expressed his unbridled confidence in Google’s YouTube way of doing “business” last week while evangelizing the Google business at two investor conferences: Morgan Stanley Technology Conference in San Francisco and Bear Stearns Media Conference in Palm Beach.

This week, via the United States District Court for the Southern District of New York, Viacom’s description of YouTube’s “infringement driven business” is actually consistent with Schmidt’s own portrayal of YouTube’s chosen way of operating:

Defendants know and intend that a substantial amount of the content on the YouTube site consists of unlicensed infringing copies of copyrighted works and have done little or nothing to prevent this massive infringement. To the contrary, the availability on the YouTube site of a vast library of the copyrighted works of Plaintiffs and others is the cornerstone of Defendant’s business plan. YouTube deliberately built up a library of infringing works to draw traffic to the YouTube site, enabling it to gain a commanding market share, earn significant revenues, and increase its enterprise value.

YouTube has deliberately chosen not to take reasonable precautions to deter the rampant infringement on its site. Because YouTube directly profits from the availability of popular infringing works on its site, it has decided to shift the burden entirely onto copyright owners to monitor the YouTube site on a daily or hourly basis to detect infringing videos and send notices to YouTube demanding that it “take down” the infringing works.

Moreover, YouTube has deliberately withheld the application of available copyright protection measures in order to coerce rights holders to grant it licenses on favorable terms. Those who refuse to be coerced as subjected to continuing infringement.

YouTube has the right and the ability to control the massive infringement on its site, Viacom asserts.

And the technology, despite Google’s repeated, and incredulous, public assertions suggesting the identification of copyrighted material uploaded to YouTube is tanamount to a sisyphusian task.

Viacom on YouTube’s will, and technological capability, or not, to filter videos:

Through its Terms of Use, YouTube imposes a wide number of content-based restrictions on the types of videos uploaded to the site, and reserves the unfettered right to block or remove any video which, in its sole discretion, it deems “inappropriate.”

YouTube proactively removes pornographic videos from its library, but refuses to do the same thing for videos that obviously infringe Plaintiffs’ copyrightsWhen it is in YouTube’s financial interest to do so, it proactively polices conduct it regards as unauthorized, even on other Websites.

In stark contrast, because it profits directly from the infringement of Plaintiffs’ works on its Website, YouTube has failed to employ reasonable measures that could substantially reduce, or eliminate, the massive amount of copyright infringement on the YouTube site from which YouTube directly profits.”

Alexander Macgillivray, Google's associate general counsel for products and intellectual property, widely cited reaction to the Viacom legal assertions:

Here there is a law which is specifically designed to give Web hosts such as us … the 'safe harbor' we need in order to be able to do hosting online.

Is Google’s $150 billion market cap fueled public confidence that the DMCA law is on its YouTube side the latest, and perhaps greatest, demonstration of Google “arrogance”?

Is YouTube a simple “Web host” that merely seeks to innocently “be able to do hosting online”?

YouTube in fact proudly proclaims itself as “the leading destination on the Internet for video entertainment.”

Google wants to believe that the DMCA will “cover” its wanton self-dealing off of unlicensed copyright video entertainment content at $1.65 billion YouTube, the very entertainment that helps make it “the leading destination on the Internet” for video.

Viacom, however, has laid out why Google’s YouTube is actually in a $1 billion Unsafe Harbor:

Defendants, without the permission or consent of Plaintiffs, and without authority, are publicly performing and purporting to authorize the public performance of Plaintiffs’ registered copyrighted audiovisual works. Defendants cause these works to be publicly performed upon request by users. Defendants’ conduct constitutes direct infringement of Plaintiffs’ exclusive rights under the Copyright Act to publicly perform their copyrighted audiovisual works.

Google may be “everyone’s favorite garage band,” but deep inside the Googleplex, Schmidt and company are keenly aware that their $150 billion garage is at risk, big time.