Posted by Richard Koman - March 14, 2007
In a long post in which he explains the Entertainment Business to addle-brained Web 2.0 junkies, Mark Cuban drives his point all the way to ultimate meaning of the Viacom-Google lawsuit. Laws that currently protect Internet companies will quickly be changed.
First, as to why Viacom is justified in their $1 billion suit against Google/YouTube:
HBO charges a monthly fee to subscribers. If someone can watch an HBO show on Google Video or Youtube, even if its divided into 1, 3 or 6 parts and reassembled into a playlist, they have far less incentive to subscribe or retain their subscription(s). HBO in turn, syndicates those shows to cable networks. As an example, A&E paid a reported $2.2 million dollars PER EPISODE of the Sopranos. If the content is available online, do you think maybe it might reduce the value to A&E and HBO of the Sopranos ? And thats before we even get to overseas syndication. Then of course there are DVD sales. Youtube downloads every video right to your PC. Google Video not only downloads to your PC, it provides the option to convert it into a PDA format including the Ipod. So tell me why it makes good business sense for HBO to let users post the content they sell for a ton of money ?
Normally, you'd figure that Viacom settles this suit for money and the implementation of more find-and-destroy technology and some kind of licensing deal. But of course there are many more content producers who are waiting in the wings and Google can't settle all those billion suits. Ultimately, content owners may be after something more - permanent legal superiority.
[T]his last point goes to the heart of how poorly Gootube relates to copyright law in general. The DMCA Safe Harbors as they are written will not exist for very long. You can bet the same companies that spend tens of millions of dollars to extend copyrights to ridiculous extremes, or that want to push for truly ridiculous things like a Broadcast Flag, or the new Webcast Royalties, will spend whatever it takes to get the law changed to their liking. Just as they have done multiple times before. One thing is certain, our lawmakers and lobbyists are relatively cheap compared to the dollars at stake here.
Google may not know it, but they have already lost. They will lose this case if its fought to the end, and whatever moral victories they may be able to gain in a legal battle or settlement will be ripped from them when the DMCA is changed. Then they will still have to negotiate with copyright owners to get their content. The entertainment industry may not be great at many things, but getting copyright law changed to meet their expecations is one thing they are better than any one at.
I suggested as much in regard to similar provisions of the Communications Decency Act. After a court dismissed liability claims against MySpace based on section 230 (13-year-old was abused by adult she met through MySpace), I expect a backlash against that immunity, considering how politicians are trying to outdo each other in being tough on sex offenders.
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