VEVO has just announced a ’strategic’ investment was made by Abu Dhabi Media Company (ADMC), a giant of a media company with headquarters in Abu Dhabi, capital of the United Arab Emirates, reports MediaMemo. The specifics of the deal remain under cover, but the rumor mill suggests the company is being valued at around $300 million.

Slated for launch in the U.S. and Canada next December, VEVO is going to attempt to leverage YouTube’s massive audience to build a destination and syndication network for “the very best in top-notch music video content”. The three founding shareholders will be sharing the revenue from the music video site with YouTube as it will be using Google’s video sharing site as its main distribution platform.

Question is: how attractive will the service turn out to be considering the fact two other majors, Warner Music and EMI, are still holding out? And how did Abu Dhabi Media Company come into play?

ADMC was created in June 2007 as a joint stock company (wholly owned by the government of Abu Dhabi) from the assets of Emirates Media Incorporated. The company owns a host of television and radio networks and multiple newspaper and magazine businesses.

The company boasts dozens of partnership and distribution agreements with media companies from around the globe, including Bertelsmann, Warner Bros., Participant Media and National Geographic. Its CEO is veteran media pro Edward Borgerding, who was Executive Vice-President of Walt Disney International in Hong Kong before joining ADMC in 2007.

ADMC Chairman H.E. Mohamed Khalaf Al Mazroui in a statement said the deal will help the company establish a leading position in the digital media industry, and added that taking a stake in the joint venture is part of an integrated approach to expand its global presence and brand portfolio.

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Update: the news item has been updated as a result of this coverage. Good thing we have a screenshot.

The link can be found on this January 7 news item on the UMG website about the ‘leaking’ of Eminem’s newest track, and leads to this YouTube clip posted by a regular YouTube user. In case you were wondering, Universal Music Group has an official channel on the video sharing site which does not feature a clip for this particular track yet.

Ironically, there is a notice from YouTube below the video stating that the video “contains an audio track that has not been authorized by all copyright holders”. Furthermore, the audio has been disabled as a result of YouTube’s new policy whereby audio that has not been authorized is simply stripped away from the video, effectively generating a ton of creepy, soundless music videos.

Way to encourage uploading copyrighted material without your consent, UMG!

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Things are not going well for Universal Music Group’s in its lawsuit against video-sharing site Veoh. First, the Los Angeles judge, A. Howard Matz, ruled last month that the safe harbor provisions of the Digital Millennium Copyright Act do apply to the case, contrary to UMG’s request for summary judgment.

On Monday, Veoh scored another point in the preliminary legal sparring that always precedes the main event. The same judge threw out the part of the complaint that named Veoh’s investors as defendants in the suit. UMG had tried to argue that Shelter Capital, Spark Capital, and Michael Eisner’s Tornante Company were guilty of “vicarious copyright infringement” and “inducement of copyright infringement” (yes, those are actual crimes) because they effectively control the company and sit on its board.

UMG cited as its precedent a case involving Napster and its then-single investor Bertelsmann, which actually was found guilty of vicarious copyright infringement, but only because Bertelsmann chose to keep Napster running even after it was obvious that it was an infringing service.

Judge Matz noted in his ruling that Veoh has so far not been found guilty of any copyright infringement, and his previous position on the DMCA’s protections shows that he understands the difference between users infringing copyright and Veoh. He also ruled that the mere act of being an investor or board member of a company facing copyright issues and fulfilling those normal duties does not constitute infringement, even if the company they “control” is found guilty.

Merely exercising ownership power to select members for a Board of Directors cannot invite derivative liability for infringement. Nor is there a common law duty for investors (even ones who collectively control the Board) “to remove copyrighted content,” in light of the DMCA. . . . these descriptions of how the Investor Defendants exercised control are the equivalent of “plain vanilla” characterizations of what directors ordinarily do . . . and are expected to do.

Rather, the board members and investors have to go out of their way to encourage copyright infringement. Yet if you read the ruling (embedded below), it is clear that Shelter and the other investors were doing everything they could to get rid of and filter out infringing content.

If this ruling and the last one are any indication, Universal Music Group has a tough road ahead as it presents its central case.

Jan 31 Umg Filing

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For those Web companies that comply by it, the Digital Millennium Copyright Act is turning out to be their best friend. Last week, Universal Music Group (UMG) was denied a summary judgment by a Los Angeles court in its copyright infringement case against Veoh. (Court order embedded below). UMG wanted a summary judgment against Veoh, arguing that it could not hide behind the safe harbor provisions of the DMCA, which state that Web services are not liable for the copyright infringement of its users if it takes certain steps to prevent it.

This is the second time a summary judgment has been denied to a company trying to sue Veoh for copyright infringement. (The last time it was a porn company). These orders are setting important legal precedents not just for Veoh, but for YouTube and others also facing DMCA lawsuits.

The safe harbor of the DMCA states that Web services are not liable for copyright infringement if the content is stored “at the direction of a user.” UMG tried to argue that Veoh should not be covered by the safe harbor because it did a bunch of things with the music and video content after it was stored on its servers, including converting it into Flash, breaking it up into chunks for peer-to-peer distribution, and allowing other users to stream it or download it.

The judge, A Howartd Matz, didn’t buy the argument. He found Veoh’s position to be “more persuasive,” noting that user’s must agree to Veoh’s Terms of Service before uploading a video, and that the terms of service clearly prohibit uploading copyrighted material. In other words, the initial act of uploading is considered to be user-directed storage under the DMCA, and whatever Veoh does to process the video after that cannot be used to get around the letter of the law.

If you live by the DMCA, be prepared to die by the DMCA.

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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.

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