YouTube slammed with $1B Viacom suit after netting NBA, BBC deals

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Viacom Inc. filed suit against YouTube and its corporate parent Google Inc. on March 13 for alleged copyright infringement, seeking more than $1 billion in damages in a case that may determine the future of content distribution over the Internet.

This development comes less than a month after a Belgian court ruled to fine Google $32,600 for each day it publishes links to news articles in Belgian newspapers, an action that the court ruled was a violation against copyright laws. The Viacom complaint states that approximately 160,000 unauthorized clips of programming owned by Viacom, including MTV, VH1, Comedy Central and Nickelodeon shows, have been available on the popular video-sharing Web site.

"The friction over copyright could be overcome in one blow if YouTube would agree to share more of its ad revenue," said James McQuivey, principal analyst for television and media technology at Forrester Research Inc., Cambridge, MA. "Then, as partners, YouTube and the studios could work together on the copyright issue. Think money first, rights second. After all, what are rights other than a way to charge money?"

New York-based Viacom last month requested that YouTube remove more than 100,000 unauthorized video clips from its site after several months of talks between the companies broke down.

Court for the Southern District of New York, seeking an injunction prohibiting Google and YouTube from using its clips.

In a statement released on March 13, Viacom said, "YouTube is a significant, for-profit organization that has built a lucrative business out of exploiting the devotion of fans to others' creative works in order to enrich itself and its corporate parent Google. 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."

Google bought YouTube for $1.65 billion last fall.

"We will certainly not let this suit become a distraction to the continuing growth and strong performance of YouTube and its ability to attract more users, more traffic and build a stronger community," said a spokesperson at Google in an official statement responding to Viacom's suit.

The lawsuit from the movie studio comes just after the site partnered with the British Broadcasting Corp. and the National Basketball Association. The partnerships, announced Feb. 26 and March 2, respectively, feature branded channels on YouTube along with sections where users can upload content.

"The deal reflects Google and YouTube's commitment to working with content owners to make compelling video accessible online, and the BBC's and NBA's commitment to the development of new platforms as they actively pursue their digital strategy," said a spokesman for YouTube. "Through this partnership, we are also bringing new content to the YouTube community."

The NBA channel lets fans around the world submit video clips of basketball moves at http://www.youtube.com/nba. Fans can access original NBA content through the remainder of the 2006-07 NBA season. The top "Post Up the NBA" submitted videos are compiled into a special weekly highlight reel on the NBA channel.

In addition, the NBA posts select plays and behind-the-scenes video highlights from NBA.com on YouTube's NBA channel.

The BBC partnership also features new BBC channels with programming like "Doctor Who" and "Life on Mars." Content from BBC Worldwide will include clips from "Top Gear," "The Catherine Tate Show" and "The Mighty Boosh" along with a range of factual programs including those presented by David Attenborough. The channel includes a limited amount of advertising.

Also, around 30 ad-supported news clips from BBC World are posted on YouTube daily. They are available only to users outside Britain. Users can comment on clips, rate them, recommend them to friends and post video responses.

Both the BBC and the NBA will produce original video content for the YouTube platform, including video blogs from BBC journalists and NBA personalities.

As part of the agreement, the NBA joins other YouTube content partners including Warner Music, Sony/BMG and Universal Music, in YouTube's "Claim Your Content" program. This feature, aimed at curbing copyright infringement, places a content identification and reporting system for user-uploaded videos. This gives the league the ability to remove content from YouTube or share in the ad revenue generated, if any.

Google and the NBA are also currently conducting a test to syndicate NBA video content across Google's AdSense network.

"The content providers who benefit most from YouTube deals are those who need to expand their audience reach," Forrester's Mr. McQuivey said.

"For these producers, there is very little reason to eschew YouTube as the additional promotion brings only good things," he said. "For content players who own more valuable assets, where Viacom is the classic example, the challenge is that YouTube doesn't think such premium content is as valuable to its long-term business as the producers do."

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