Extra Credit Post : YouTube legal battle

Stemming from disagreements in revenue sharing contracts with Warner Music, YouTube started muting many music videos on its site earlier this year. At first only videos featuring music by Warner's artists were muted, but recently in the UK and Germany all music videos containing copy written songs have been taken down or muted.

This has come about because of further disagreements between Google, Youtube's parent company, and the performing rights associations in those countries. Google has claimed that the high fees that these performing rights organizations want them to pay are exorbitant and would mean YouTube would turn into a money-loosing business rather quickly. In the case of the German market, the GEMA, the German performing rights organization, wants to charge Google 12 cents every time a music video containing copy written music is played.

The basic underlying point of disagreement is how record labels and artists should be paid for their content being featured on YouTube. YouTube makes money from advertising, and many in the industry feel that too much of the advertising revenue is going in their own pockets, rather than being spread out to the creators of the content which YouTube is making money off of.

Many YouTube users have had strong negative reactions to the muted content. However, Google have moved quickly to establish new agreements with players in the music industry to solve the problems. The most significant sign of success so far is a venture between Google and Universal Music Group to create a new site called Vevo. The site will feature music videos from the whole Universal catalog and will use the YouTube framework to do so. The venture will make money by selling advertising space and then splitting the revenues between Google and Universal. The head of Universal, Dick Morris, hopes to convince other labels to follow suit and join Vevo, with the goal of creating a one stop site for music videos, much like imeem is for music.

It is important to note that these deals are actually key to YouTube's success. Currently the operating costs to run YouTube far outweigh the revenue being brought in through advertising. However, if Google can partner YouTube with more distributors and feature 'legitimate' content, their ad revenue could increase greatly. Google aren't only actively pursuing music deals but also are partnering with movie studios to start putting tv and movie content online.

Overall it is very difficult to weigh in on these legal battles because the particulars of each case are very difficult to find and in many cases are not allowed to be disclosed. It is clear that labels and performing rights organizations need to be compensated as long as Google is making a profit off of advertising revenue though YouTube. However, both sides seem to be struggling on how much of that revenue should be distributed. The new agreement between Universal and Google seems to be a very promising start and hopefully other labels will join in, creating a much better experience for the user compared to the current YouTube debacle.

Tom Davidson