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Mark Cuban reprints some speculation on the role that copyright issues played in the Google/YouTube deal.
Among other things, the anonymous author scoffs at the idea that the road to riches is user generated content:
In spite of the media "user generated" puff pieces it was clear to all involved that they generated that content by hooking up their TV tuner cards to their PCs.
It didn't take a team of Harvard trained investment bankers to come up with the obvious solution and that is to set aside a portion of the buyout offer to deal with copyright issues. It's not uncommon in transactions to have holdbacks to deal with liabilities and Youtube knew they had a big one. So the parties . . . agreed to earmark . . . [n]early 500 million of the 1.65 billion purchase price . . . [to be] held in escrow. Other charges are more inflammatory, such as: (1) The structure of the deal, which involved an equity stake in YouTube, was devised so as to avoid any need to share money with artists whose work had been taken; (2) Media companies promised to sue other infringing websites while laying off YouTube for six months.
The first of these is a straight contract issue - a media company cannot avoid paying royalties by renaming a payment, so there is little doubt that this one will get sorted out.
The second contention is interesting; basically, it would mean only that the companies gave YouTube an open license for six months in exchange for money, which is a perfectly legitimate transaction. The question that will interest the antitrust types is not whether the media companies go after YouTube competitors, but whether they promised Google that they would not settle with these sites, giving them licenses in exchange for money.
Of course, there is no quarantee that the speculation is accurate, except the argument "It must be true - I saw it on the Internet." But it will be hard for the relevant parties to decline comment, so you can bet that lots of lawyers and PR people are billing hours today,
ADDENDUM: Come to think of it, the first issue is a real mess. Suppose a court decides that artists are entitled to a portion of the proceeds from the sale of the equity stake in YouTube. How can this be divided among the thousands of videos, views, and participants, each of which is operating under a different license agreement? The one certainty is that there will be litigation, which will continue until the level of legal fees equals the payout -- or more. Ever hear of a dollar-bill auction?
posted by James DeLong @ 11:45 AM | Media: Video, Music...
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