After its CEO said in September that YouTube and MySpace owe Universal Music Group “tens of millions of dollars,” the media giant has followed through with its threat and filed suit against MySpace for copyright infringement, according to the Wall St. Journal (subscription required). The most interesting part of the suit is that Universal is alleging that MySpace participated in the copyright violations by transcoding copyrighted video so that it can be replayed and sent to other users.
The Journal notes that today is also the day that MySpace is introducing a new tool that will allow copyright holders to flag unauthorized content on the site. That tool (our coverage) uses technology from Gracenote. MySpace said in a press release that the suit is “unnecessary and meritless.” That transcoding argument sounds like a serious one to me.
Weeks after threatening YouTube and MySpace both this fall, Universal signed a licensing agreement with YouTube the day before the Google acquisition was announced. It also sued Sony’s Grouper and Bolt for copyright infringement.
Is a fresh round of heavyweight copyright wars breaking out? Is there any possibility of an out of court settlement between the two companies? This week’s Craigslist court decision immediately comes to mind. The online directory was ruled on Wednesday to not be responsible for discriminatory housing postings on its site. The court found that Craigslist is a conduit and not a publisher. That ruling was complicated and fell under the Federal Communications Deceny Act. Universal’s lawsuits, against Grouper, Bolt and now MySpace appear headed for a direct test of the DMCA Safe Harbor provision, which is believed to protect parties to copyright infringement so long as they remove copyrighted content upon request. The argument about transcoding video may be the killer in this case.
It was a matter of time before this went down. I expect MySpace to have many more problems with this in the near future. Re-enconding the video content will be very difficult to defend and since MySpace doesn’t have the best coders in the world, it’ll be interesting to see how they proceed in protecting themselves and their brand.
I’m first!
Do note that YouTube also performs transcoding so a precedent here will apply to YouTube as well. It’s interesting that this argument is being used because I presented it in a comment on Mark Cuban’s blog yesterday as one of the arguments that could be made as to why YouTube does not fall under the Safe Harbor provisions of the DMCA.
Drama, are you saying that you’ve been feeding Universal legal arguments? I knew you were going to get yourself into trouble! You can’t write as many long comments as you do without eventually saying something you shouldn’t. Kidding, your comments are always interesting.
Good call Drama. Deja-tube it is.
Looks like another settlement for the Universal camp.
thanks for sharing
Unviersal Attorney 1: Sweet! Another $2000 check from some hapless p2p user! This should cover about five billable hours’ worth of expenses…
Universal Attorney 2: It sure is fun suing lots of poor people, but how’s about we try suing one really rich company for a change?
Universal Attorney 1: (slaps forehead)
Kinda funny considering DeWolfe’s wife was and probably still IS a VP at UMG.
The big record companies are hanging on for dear life. Wait until all the good bands start releasing their music with creative commons licenses, marketing directly to the fans and touring to make money.
The result is more great music, no big spoiled “created” mega-stars, and happier fans and musicians.
Also funny considering how important MySpace is to their promotional efforts…
shawn: that is interesting idea…but the problem is again ticketmaster who lockedin all the venues on ticket sales…and charges tons of fee on top of the ticket price (even charges for printing ticket)
What do record companies add to music anyway? We don’t need them.
It’s going to be an interesting next couple of months. If either the Universal or Robert Tur lawsuits can deny the Safe Harbor exclusion from YouTube or MySpace, the floodgates will be opened. Of course, there are sustainable remedies possible: I’ve been saying for some time that there is no real reason why YouTube/MySpace could not implement pre-screening of user submissions. Yes, this is a huge operational burden (probably not fatal in either case) and changes the “immediacy” of the user-experience. However, these services will be compelled (either through self-imposed risk mitigation strategies or explicit court ruling) to implement such measures.
Ultimately, the big studios want a cut of all of this transaction money. The bigger problem stems from the smaller content owners, such as Robert Tur which gain nothing from the “promotional benefit” that services such as YouTube tout to offer content owners.
The big date is Dec. 4th when Tur’s motion to dismiss YouTube’s Safe Habor defense will be presented to the courts. As I’ve mentioned on Cuban’s blog, I think there’s huge downside risk to GooTube and so I believe they will be agreesive in their out-of-court settlements efforts such that there is no ruling made. Regardless of whether Tur wins the ultimate lawsuit, if YouTube is denied the Safe Harbor defense, it’s all pretty much over….
“I’ve been saying for some time that there is no real reason why YouTube/MySpace could not implement pre-screening of user submissions. Yes, this is a huge operational burden (probably not fatal in either case) and changes the “immediacy” of the user-experience.”
There’s merit to saying that this could of screening could be turned into a postive, potentially not costing much — or anything. Think people who look at pages other than the digg frontpage.
We desperately need some laws to be passed making clear who’s responsible for what on what kind of website; sadly, the lawmakers don’t have a clue about the internet, as the battle over net neutrality clearly shows.
Chris – I agree that there is a big downside risk for GooTube, but out of court settlements are not going to solve the problem. They will only stave off Universal. The next day is going to find someone else at the doorstep. IMHO – GooTube would be better off going for a Safe Harbor ruling in its favor, that would certainly dissuadeade a lot of future litigation. With that ruling in hand a smart move would be to take your screening suggestion and run with it.
Myspace sucks…Kudos to Universal.
Fasten your seatbelts, gang, because there is more of this to come from UMG and others.
Yes Marshall. I am in the process of preparing to sue Universal. They stole my legal idea! In fact, I see evidence in their filing that they even transcoded my exact language into different wording.
I didn’t know that transcoding data was a sin.
What is Universal smoking? We run a hybrid software company / record label (http://www.songboost.com) and I only have a couple of years of music industry experience; so maybe I’m missing something here. However, to all you MySpace users out there: please, please take our content and put it all over MySpace. Say after me Universal “exposure = sales, less exposure = less sales”. Somebody is missing the point that there are two content types – unleaded and premium. When you are on YouTube or MySpace you are experiencing the unleaded (exposure grade) version of content; when you want to download something for keeps via services such as iTunes you are paying for premium grade (consistent encoding rate, accurate meta data, convenience, virus free, complete, unedited, ad-free, etc). Video transcoding, are you freaking kidding me! You should be paying MySpace to transcode your videos from premium to exposure grade!
lol @ iTunes media being premium grade. Compressed music sounds like crap, and before you argue, none of them are using lossless.
OK, I will concede that point and settle for premium diesal. It’s still better than the stuff you find here there and everywhere…
Myspace will just have to pay out the same type of money YouTube did. “Hush Money 2.0″ I think that a bigger problem for myspace will be the mass defections when they have to implement some new restrictions. It’s supposed to be the wild west of the web. I think when you combine new restrictions with a horrible user experience that never seems to end, it’s going to give other networks an opportunity to gain some market share. http://www.roofcontractor.com
You can read that WSJ article without a subscription if you have one of those congoo netpass installed.
Ah, I love disruption!
A lot of folks here seem to be missing the point that You Tube (thus Google) and MySpace (thus Murdoch) are making bazillions of dollars illegally off the backs of musical artists without their permission via copyright violation. The artists can’t afford to sue them (with the exception of U2 who own shares in Universal) so the record companies have got to. Why not a system ala radio in which royalties go back to the artists when their songs are played? If they can put a man of the moon….
You know, everyone attacks this issue in the same old way. Big nasty record company, trying to hold on for dear life, against all the little artists who will soon be free of their staliinst overloads, and the hordes of consumers who ‘feel’ the price point charged by said record company is somehow ‘anti-net’. Now consider the hordes of musicians just desperate to have one of these marketing giants behind them, marketing their music to a mass audience in a way that 16 year olds on MySpace could never do.
Regardless of how you all think that copyright is dead because you want to download whatever you want for free, consider the people who actually built and own these fine musical works. Consider now how it would if you were told to give up all your work, for free, because some bloggers got together and decided what is “right” and what is “ok to do for me”. Artists choose to sign with record companies out of free will. Let the poor guys exercise their rights….
Prediction? Settlement. Universal can’t stop MySpace and MySpace can’t effectively monitor 130 million users. Since it’s all resulting from not having reached a similar agreement to the one with YouTube, let’s hope it will end quickly. MySpace will introduce another meaningless tool that will not really solve anything. More importantly, they will agree to respond better to Universal and will somehow figure out a way to pay. More lawyers will make a living from interpreting the DMCA and life will go on.
However, UMG is playing with fire. This can potentially introduce a dangerous halt to the digital media industry. One draconian ruling and the whole websphere will work under a going concern. While this industry is seeking for a sustainable equilibrium, I don’t think the legal tools are the right one. The law can’t chase technology, making judges and lawyers de-facto business negotiators and even legislators. I certainly hope UMG can find it in their heart not to be penny wise and pound foolish.
Prediction? Settlement. Universal can’t stop MySpace and MySpace can’t effectively monitor 130 million users.
>Actually MySpace can be stopped with a stroke of the pen.
Since it’s all resulting from not having reached a similar agreement to the one with YouTube, let’s hope it will end quickly.
>Settlement irrelevant. The precise scope of the DMCA safe harbor will be litigated. And I believe Congress did not intend to protect a business such as YT.
MySpace will introduce another meaningless tool that will not really solve anything. More importantly, they will agree to respond better to Universal and will somehow figure out a way to pay. More lawyers will make a living from interpreting the DMCA and life will go on.
>Yes, YT and MS will pay the content owners or they will be sued. And probably lose.
However, UMG is playing with fire. This can potentially introduce a dangerous halt to the digital media industry.
>That’s too funny. It’s YT whose market worth is at stake.
One draconian ruling and the whole websphere will work under a going concern. While this industry is seeking for a sustainable equilibrium, I don’t think the legal tools are the right one. The law can’t chase technology, making judges and lawyers de-facto business negotiators and even legislators.
>Incoherent babbling.
I certainly hope UMG can find it in their heart not to be penny wise and pound foolish.
>They produce content; they will be paid for it.
Aner: Universal can easily stop MySpace. The court can order an injunction that forbids MySpace from engaging in certain activity.
I think the most interesting thing about the debate over copyright law in this day and age is the double standard that many people apply. People don’t like big media. Its tactics and practices are widely criticized and there’s an emotional tendency to dislike billion dollar empires the same way populations have always resented the kings and queens that rule over them. But the bottom line is that these companies own the rights to content and you cannot logically make the distinction between copyrights owned by billion dollar companies and small companies/individuals. We either accept copyright law or not. It might be very foolish for big media to not leverage MySpace and YouTube as promotional platforms, but they own the rights to their content and get to dictate how that content is used and by whom, even if we think their decisions are counterintuitive. It’s clear that YouTube and MySpace are directly profiting from the distribution of copyrighted content and I think there’s a very good argument to be made that they do not fall under the Safe Harbor provisions of the DMCA for quite a few reasons. At some point, one rights holder will take this issue all the way and we’ll get a precedent that gives more clarity on this issue, which will benefit everybody.
The question to ask people that think MySpace and YouTube are doing nothing unethical, if not outright illegal, and proclaim the death of big media is: if big media is dying, why is everybody so fond of big media’s content and uploading/sharing it on such a massive scale? The answer is obvious: while there’s a lot of hype around user-generated content, for the time being, the professional content being produced by big media is what people primarily want to consume. For all the people that don’t want to consume this in a way that financially benefits the producers, remember this: if the economic incentive for companies to produce this content is significantly reduced, the content you love won’t get produced anymore. Imagine an unlikely scenario just for the sake of argument: if the revenues from producing The Daily Show, for instance, are made so uncompelling, there won’t be any Daily Show episodes to share on YouTube. It’s imperative that big media recognize that consumers’ habits of media consumption are changing in this digital age and that the ability to time shift content is being demanded, but consumers cannot have their cake and eat it too. If you want big media content, you shouldn’t bite the hand that feeds it to you. In any economic system, it is in the interests of all parties to ensure that the producers of goods and services are compensated appropriately for that production or production will eventually stop.
In my personal experience Universal Music Group don’t really care what’s mine or yours as long as they can make a buck.
They’ve owed me USD 4100 since 1997 and refuse to pay.
I’m no media lawyer of course, but it would be hard for me to believe the transcoding argument should have merit. It could probably be found to have merit if someone sells the idea hard enough, but natively the transcoding would hopefully fall under a “conduit not publisher” ruling like in the Craigslist situation.
The worst thing of all is how horribly slowly some of these old media companies are to coming around to the fact that this type of “infringement” increases the value of the brand beyond any promotion they’ve ever done.
Look at overhyped ratings non-performers like The Daily Show and Colbert and how youtube/digg have increased their brand value. I don’t have the exact numbers, but at one point I thought the weekly cume for these shows wasn’t even a million viewers. Some of the “infringed” online segments must have had more views than this.
Even without directly monetizing these hits, the boost to their brand’s value has to be much more valuable than they are capable of grasping. It’s certainly done more for their brands than the advertising and promotion that they had to PAY for.
Big new media needs to keep licensing and promote the hell out of proactive companies and leave idiots like this in the dust.
Can you explain a little bit more about what role exactly MySpace played in the infringement and what exactly the transcoding indicates, as well as if there is a legitimate reason to allow users to transcode? If there is, then it would seem to me that MySpace would still be safe under the DMCA Safe Harbor.
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ii dont care whats going down you guys are fags theres nothing wrong with my space you just fucking jelous because myspace is mutha fucking better you pricks im sick of this shit.
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Hello. Sorry for offtop:
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