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Speculation on Google / YouTube "Hardball" 125

Posted by kdawson from the stream-no-evil dept.
An anonymous reader writes, "Interesting speculation on the 'GooTube' deal, oozing with corporate intrigue. Based on Mark Cuban's blog and a subsequent ZDNet blog posting, it seems as though there might have been some dodgy goings-on just prior to the deal. In short, YouTube may have handed the major labels approximately $50M so that the labels would turn a blind eye to the copyright infringements AND go after the competition to cement YouTube's position in the market. Universal started the ball rolling a week after the deal by suing Bolt and Grouper." Cuban's blog does not identify the author of the speculation, who calls himself "an experienced veteran in the digital media business." Cuban writes that this is someone he "respects and trusts."
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Speculation on Google / YouTube "Hardball" More

Speculation on Google / YouTube "Hardball"

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  • ...as in record labels? There isn't all that much music on YouTube, last time I checked...

  • The artist formally known as.. (Score:4, Funny)

    by QuantumG ( 50515 ) <qg@biodome.org> on Tuesday October 31, 2006 @05:45PM (#16665005) Homepage Journal
    "an experienced veteran in the digital media business."

    Oh my god, it's Prince!

  • "GooTube" (Score:4, Insightful)

    by hsmith ( 818216 ) on Tuesday October 31, 2006 @05:46PM (#16665019)
    is fucking obnoxious.

    that is all

  • Translation: (Score:5, Insightful)

    by Anonymous Coward on Tuesday October 31, 2006 @05:46PM (#16665023)
    "In short, YouTube may have handed the major labels approximately $50M so that the labels would turn a blind eye to the copyright infringements AND go after the competition to cement YouTube's position in the market."

    You mean... like... pay licensing fees? And encourage them to prosecute those who don't?

    • Re: (Score:2, Insightful)

      by multisync ( 218450 )
      You mean... like... pay licensing fees? And encourage them to prosecute those who don't?


      Oh, you mean like how Microsoft paid "licensing fees" to SCO around the time the lawsuit was filed against IBM?

      • Re: (Score:1)

        by Icculus ( 33027 )
        Oh, you mean like how Microsoft paid "licensing fees" to SCO around the time the lawsuit was filed against IBM?

        doh, you beat me to it... I was thinking the exact same thing

      • One is buying rights. One is ... well, I don't really know much about the SCO stuff but I'll be damned if this isn't an over-the-table license acquisition.
        • You may be right. If this is an up-front license arrangement, granting You Tube the use of copyrighted material in exchange for $50,000,000 per media company, and available to all willing to pay similar licensing fees, I don't really see a problem with it.

          There was nothing really wrong with Microsoft purchasing licenses from SCO, either. It's just that the money helped fund the cash-poor company's lawsuit against IBM. A cynical person might say Microsoft was taking advantage of an opportunity to hurt a comp

          • Re: (Score:2)

            by rtb61 ( 674572 )
            Well of course the really, really, wrong thing about it might be that the performers who were entitled to receive that money, got nothing and the publishers kept the lot, hence the possible need to keep it secret (especially as the publishers published nothing, youtube was the publisher) ;/.
      • Or they'd have to pay the artists a cut.

      • Re: (Score:2)

        by Tim C ( 15259 )
        Yes, exactly like that - except that in this case, it's the rights holders that are being paid, in order to avoid being sued. So, no, not really like that at all.
    • Ah, but licensing fees would be royalties which they'd have to split with artists. Clearly you can see that these are not licensing fees. They are instead getting $50 million dollar investment stakes, which Google is buying them out of.

      The implication is that the contract giving them the money actually said "You only get the $50 million if you sue our competitors".

    • Re:Translation: (Score:4, Insightful)

      by Anonymous Coward on Tuesday October 31, 2006 @06:29PM (#16665567)
      You mean... like... pay licensing fees? And encourage them to prosecute those who don't?

      From TFA: The media companies had their typical challenges. Specifically, how to get money from Youtube without being required to give any to the talent (musicians and actors)? If monies were received as part of a license to Youtube then they would contractually obligated to share a substantial portion of the proceeds with others. For example most record label contracts call for artists to get 50% of all license deals. It was decided the media companies would receive an equity position as an investor in Youtube which Google would buy from them. This shelters all the up front monies from any royalty demands by allowing them to classify it as gains from an investment position.

      • To continue the above quote: "A few savvy agents might complain about receiving nothing and get a token amount, but most will be unaware of what transpired."

        Copyright here is being used as a weapon by the big companies (Google and the entertainment conglomerates) to crush their competition while doing nothing for artists. The conglomorates get more money while cutting off the air supply to YouTube's competitors (the article mentions how suits against other sharing sites will scare off venture capital).

        • To continue the above quote: "A few savvy agents might complain about receiving nothing and get a token amount, but most will be unaware of what transpired.

          They'd do a class action if they have any sense.

        • And soon artists will have to belong to RIAA etc to get any traction on utube at all - prominent placing, preferential search treatment etc. Then we're back to where we started.

        • Re: (Score:2)

          by Knetzar ( 698216 )
          it can't be being used by Google. Remember, Don't be evil.
      • I doubt the "music industry" would admit that downloading copyrighted material from YouTube is legal, but if YouTube payed a "license fee" was payed then it would be legal, no?
      • so... the musicians should sue the RIAA for partnering with those that illegaly distrobution of THEIR content, blood, sweat and tears...
      • dat's a nice website (shop) you've got der... you wouldn't want anything to happen to it now would you... I mean, copyright suits (fires) are happening all over da place... who knows where it'll happen next...
    • Translating the translation;

      "In short, YouTube may have handed the major labels approximately $50M so that the labels would turn a blind eye to the copyright infringements AND go after the competition to cement YouTube's position in the market."

      "You mean... like... pay licensing fees? And encourage them to prosecute those who don't?"

      You mean... like... pay extortion fees? And encourage them to kill those who don't?

    • Re: (Score:1)

      by Kazrael ( 918535 )
      It isn't licensing fees. They organized it as an "investment" in the lable so that it is not profit/gross. Using this "investment" method, artists do not collect money out of the company gain. I would be surprised if the SEC didn't look into this questionable "investment".

      It is a total screw over to any and all artists under the labels paid off.
    • It's more of give the labels the money up front, AND agree to start cleaning up so the new owner Google with it's huge amounts of profit isn't immediately a target! Who wouldn't want a clean cut case against Google, or a part of that 1.5 BILLION with a "B" that Google paid. Now that MONEY$ are in the air, the RIAA is going to start being more harsh on the next company to get sold for lots of loot. Kinda like how each case after Napster the RIAA went for more money each time, the title to the company, not

    • Re: (Score:1)

      by kdawson ( 3715 )
      RTFA. The speculation is that these were not licensing fees. If the media companies collected licencing fees, they would be obliged to share them with the artists. Instead the payments were structured as investments in YouTube, so that the companies could claim capital gains once Google consummated the deal. No artist payments are owed on capital gains. So goes the speculation.

    • Re: (Score:1)

      by ghyd ( 981064 )
      No licensing fees were paid at any moment.

  • Wouldn't it be cool (Score:3, Insightful)

    by SQLz ( 564901 ) on Tuesday October 31, 2006 @05:48PM (#16665045) Homepage Journal
    If there was a web site where you could download free clips of your favorite shows, movies, videos, etc, and that the copyright holders would recieve free advertising and same basic control over content of the site?
  • ...except if there's a couple of billion dollars to be made.

    That bit about the lawsuits aimed at YouTube competitors is especially tasty. I don't know if Cuban has an axe to grind here, but if true it just confirms that Google is now simply interested in what all publicly traded companies do: maximizing shareholder value. Everything else is secondary.

    Ah well. It was fun while it lasted.

    • Re: (Score:2)

      by thebdj ( 768618 )
      I can think of a few conflicts on Cuban's part. 1) He has interest in media companies, namely HDnet. 2) He helped bankroll Grokster in their failed legal attempts. 3) His interest in IceRocket, a search engine for blogs. Since attacking YouTube is basically attacking Google, this is a conflict too. 4) He is a partner in Red Swoosh, which apparently is using peer-to-peer tech to deliver media to PCs.

      So, to say he has a conflict here might be an understatement. Also, Mark Cuban has a tendancy to open hi
    • How is this evil on Google's part? As it sounds, they took a small part of their massive advertising income, paid it as a licensing fee to record labels, and can now offer a web site where their customers can freely and legally post content containing copyrighted music and video clips. That's a tremendous legal service offered to their customers at no charge. It should protect a large number of people from lawsuit who might have otherwise been at risk.

      The only potentially "evil" thing is if the record la

    • I don't know if Cuban has an axe to grind here

      Cuban is the guy who very publically announced that "only a moron would buy YouTube", literally weeks before Google - not famous for being morons - did exactly that. So of course he has an axe to grind ... he was made to look like an idiot in public by his own predictions. Why am I not at all surprised that a conviently detailed "insider" is now spinning a story to the very guy who needs it to salvage his reputation?

  • I won't preface this with my usual "Mark Cuban is an idiot" response to anything he says, since it is an interesting question what Google plans to do with this thing so it's more of a money-maker than a liability.

    But it would have been helpful if his informant had distinguished a little between what part is secondhand gossip and what is pure fantasy.

    • Actually, I think after this, Mark Cuban has proved himself to be quite brilliant. He said YouTube was a bad investment, saw a post detailing shady dealings behind the acquisition, made it very public, and will probably MAKE YouTube a bad investment after all. I believe the original post (on pho) was possibly meant to alert artist-rights folks to the swindle-in-progress, but once he got his hands on it... wow.

      From the sounds of it, one particular part is specualtion, and the rest is probably true... but I
    • I won't preface this with my usual "Mark Cuban is an idiot" response to anything he says,

      I will, Mark Cuban is an idiot!

      However, with that being said this article does make a lot of sense. I was wondering how Google was going to avoid the major lawsuit liablity that youtube has become. Google will just buy off the lawsuits and crush their competition. Hmmmm... This kind of sounds like how Microsoft does business.
      • I was wondering how Google was going to avoid the major lawsuit liablity that youtube has become. Google will just buy off the lawsuits

        I fail to see how this is illegal or immoral. (Or fattening.)

        YouTube had a lot of lawsuit liability because they were a party to redistribution of copyrighted content without consent of the copyright holders. They made a licensing deal with several of the copyright holders. Now they have substantially less liability -- they have "gone legit".

        Assuming that the core concept
        • I fail to see how this is illegal or immoral. (Or fattening.)
          It causes cancer in rats...

        • Assuming that the core concept of Intellectual Property is legitimate (which one can never assume on Slashdot, so let's just pretend it is for the sake of argument), what's wrong with that? Isn't that how the system is supposed to work?

          It is, but not in an exclusionary way (as the email implies). I believe that's an antri-trust sorta thing.

          The most astounding part is the claim that the labels structured the deal so that they wouldn't have to pay the artists any of the settlement money. For a bunch of

          • Don't underestimate Google. I think they paid off the RIAA just to be safe, Google has A LOT more cash to be sued over than YOUTube ever did. The fact that the RIAA may have scammed the artists is moot. If anything it makes Google's purchase of YouTube more adventageous, because they now have a ready-made channel to start putting LEGAL stuff they aquire on there. Remember, they already have Google Video, but that needs work, perhaps they're trying to springboard off Blogger, and other user generated con

        • Re: (Score:1)

          by AdamKG ( 1004604 )
          If TFA is correct (though I doubt that it is) then the issue is that YouTube/Google isn't paying licensing fees. They, through a financial trick, gave media companies a few dozen million (fifty millions is thrown about, but who knows) to sic them on competitors without actually licensing any content.

          So even if the idea of copyright exclusivity restrictions is valid, then that isn't what's going on here, because those copyright restrictions holders didn't release their restrictions to Google. Because that
        • So when you call your kid over the flippin' Ma' Bell and sing happy birthday to him, AT&T is "a party to redistribution of copyrighted content without consent of the copyright holders"? Nope, common carrier. How is this any different, so long as they comply with any DMCA takedown notices?
          • How is this any different, so long as they comply with any DMCA takedown notices?

            Well, to begin with, if they 'comply with takedown notices' they are editing content. They cease to have common carrier status.
  • Once again, come to Slashdot, put on your tinfoil hat, and enjoy! Good thing this ain't a news site anymore than say, The Daily Show is.
    • How is this be a scandal anyways? It was in the open press just before the acquisition that youtube had negotiated a license with the copyright holders to publish music videos. Of course, that would not cover other video sharing sites, so they would continue to get sued, giving youtube an advantage in the market. How is that backhanded? Is it a conspiracy when Microsoft gives me preferential treatment by allowing me to use Windows XP because I bribed them with $199, whereas those who use XP without payi

    • Re: (Score:1)

      by fiendy ( 931228 )
      Well according to this study:
      http://arstechnica.com/news.ars/post/20061004-7908 .html [arstechnica.com]

      The daily show is just as good a source of news as some major networks.

      Sad? Maybe, but it makes ya think (about your comparison).
      • Pretty much what I was going for. But I'm apparently trolling, so ah well. Don't criticize those who choose which stories to post! Even if they are being idiots! Whoohoo!
    • I actually think you're right here. Universal/NBC = owned by GE. NBC has several legit things on YouTube right now and they seem to be working with YouTube, not against them. I don't see how them going after sites that they're NOT working with is a surprise.
  • For example, there's one show that can't be found on YouTube by typing in its name. All you get is the odd clip. However, if you type in the first initials of the words that make up the shows name, you find a load of full episode. It'll be like the creators of Doctor Who's revival series who used 'Torchwood' to label tapes so no-one would nick and pirate them. All people will do is to give each show an alias name and put that up.
    • And as long as that remains a secret, the networks won't much care. Yeah, it represents lost money to them, but it's lost in the same noise that swallows up commercials that go unwatched because you're in the bathroom. Effectively, it's like sharing the video with a few of your friends: not the network's favorite solution, but not intolerable.

      When any alias convention becomes well-known enough that anybody can download any TV show they want to, then it becomes big enough for them to issue a blanket request
  • Heh.. GooTube.. Heh..
  • why would youtube shell out a dime when the DMCA protects them?

    cuban's take on youtube has been insane from day one
    • The law also protects honest businesses from the mafia, but that doesn't stop them from paying for extra "protection". And this isn't Cuban's take... this is an email that he reprinted that verified his take. Much more so than I think most people would have guessed...

  • So, (Score:2, Insightful)

    by Threni ( 635302 )
    No source then? Just rumour? $50,000,000 isn't much to pirate anything you want. I mean, if that's all it takes, www.piratebay.org could probably get every user to stick in a £1 each and make the site legal.
    • If I make $1 from every 1000 Chinese I have a million dollar.

      If every 1 in 100 PS2 owner buys a Playstation 2 game I made, I'd have sold a million copies of the game.

      Therefore it must be easy to make a million dollar or for anyone to sell a million copies of a PS2 game.
    • $50,000,000 isn't much to pirate anything you want.


      The article summary was a little off. From Cuban's blog:

      They negotiated about 50 million for each major media company to be paid from the Google buyout monies.


      I'm not saying either the summary or the blog reflect reality, just that they don't seem to agree.

    • Re: (Score:2)

      by tnk1 ( 899206 )

      No source then? Just rumour? $50,000,000 isn't much to pirate anything you want. I mean, if that's all it takes, www.piratebay.org could probably get every user to stick in a £1 each and make the site legal.

      I admit that does sound like a low figure to buy out a voracious profit making machine like the Industry, but it doesn't have to be a straight up cash payment.

      If it was truly an investment position, as some have speculated, then payment may have been in stock, or a loan, or some sort of othe

  • Mark Cuban's Blog?!?!?!?!?!?!? (Score:1, Funny)

    by Anonymous Coward
    WTF is wrong with him! He's a billionaire and he has a blog? Jesus MF Christ! If I were a billionaire I'd be fucking supermodels and doing shit that I always wanted. I'd also be doing things to try to make the world a better place - a blog isn't one of them!

    That being said, maybe that's why I'm not a billionaire, millionaire, and why I'm fucking broke.

    He's still an arogant prick, though!

    • How you do you know he's NOT doing all of that plus the BLOG... After all, he OWNS a pro basketball team amongst other things... I'm pretty sure if he's not married, he's definitely not without in the nookie department either.
    • Being a billionaire, and being an egotistical twat (like almost all other bloggers) are not mutually exclusive.
  • What the hell happened to the vaunted 'Do No Evil' of Google a few years back? The past year or two have seen Google become more and more evil, all probably due to the IPO a couple of years ago - Google is now owned by the shareholders, and the only pragmatic thing for corporations to do is to be evil, as being nice makes no money so the shareholders start complaining.

    Google will become the next Microsoft before too long...

    • Re: (Score:2)

      by Shados ( 741919 )
      If I remember well, the IPO didn't give share holders controling portion of Google, so while it would affect Google, it probably doesn't affect it SO much.
      That being said, from what I've seen in the slashdot articles about Google's "evil doings", 99% of them tend to be FUD, like this one. Rarely, if ever, were they actualy "real" evil, but usualy just people flipping over nothing. This case is a prime example. Youtube pays money to calm down copyright holders. If they pay (as they should by law, as far as
    • 1) do no evil
      2) do_no_evil.redefine();
      3) Profit!
  • You're supposed to pay license fees or whatever you want to call it because it gives you legitmacy, and it's supposed to be an advantage. If only you have to pay the said fees while other pirates are allowed to ignore it, then you're simply losing money for nothing. It is perfectly acceptable that if Google/YouTube paid the copyright holders a bunch of money to establish legitmacy that it'd be in their interest to get rid of other illegitmate sources. Otherwise they'd have wasted all that money for nothi
  • I wouldn't agree that Mark Cuban is an idiot I will say that he is a tool. He used to be on the side of consumers that are getting fake HD from Directv and Dish Network then one day its like no big deal.

    Fake HD being 1920x1080i transcoded to 1280x1080i or 1440x1080i and reduced bit rate beyond what the lowering of resolutions would provide for. Sometimes the "HD" that they send looks like a bad xvid encode.
  • Just read his blog and try to think otherwise. He hasn't managed to lose his fortune yet, but give him a few years or ten.
  • From TFA:

    The media companies had their typical challenges. Specifically, how to get money from Youtube without being required to give any to the talent (musicians and actors)? If monies were received as part of a license to Youtube then they would contractually obligated to share a substantial portion of the proceeds with others. For example most record label contracts call for artists to get 50% of all license deals. It was decided the media companies would receive an equity position as an investor in Yout
  • If YouTube gave the labels only $50 million, and Google gave YouTube $1.6 BILLION, no matter what the relative value, rights, or agreements, the labels are going to renege on the agreement.

    They might not get away with it. Whatever happened to their attempts to wrestle out of their <$0.99 deal with Jobs on iTunes?

    They're dumb, but they're strong. $50M is a drop in the bucket, even with the CD sales biz down to something like $10-12B a year.

    It will be interesting to see how much Google eventually winds up
  • If you read Mark Cuban's blog. This makes it more believable, by the way.

  • Interesting enough to maybe be true. Certainly paints Google in a far worse light than anything else I've heard of, though, so that makes it a bit suspicious.

    And I'm not exactly a Google fan...

  • Let's not forget, this is the same guy who, approx 1 month ago, said "only a moron would buy youtube" [slashdot.org]
  • The single main reason why I felt so ambivalent about Google's digestion of YouTube is because I knew it'd kill it. Barely 12 hours after the initial news of the acquisition hit, we were also hearing reports of how Universal and the other usual parasites were already circling.

    Time to go back to the BT darknets or Kad, guys. "Mainstream," means "chewed up, with anything even remotely resembling worthwhile or genuinely meaningful material filtered, and spat out," where this type of thing is concerned.

    I hope
  • The NYT reported the week of the deal that the music labels got shares ahead of the buy to compensate their music video libraries being online as well as future revenue sharing on ads.

    Some rumor.

    What - did it have to be on the front page to qualify as reported?
  • Here is the story without the spin:
    YouTube paid off the media companies that could scuttle it's sale deal and tie YouTube up in court for years. Then, those media companines went after companies similar to YouTube.


    This is an interesting variation on greenmail and greymail. Nothing sinister gonig on.

    Here's your tin foil hat.
  • did they get $50,000,000 to blow on such a weird purchase? --Heck, where did they get the millons it probably cost to finance their general expenses?

    I mean, how much income did their web service generate? None, as far as I can make out.

    Was this an investment ploy used specifically to fleece Google or some other big buyer? The whole thing was a pump & dump? That was their business plan?

    What the heck?

    Stuff like this just makes my head spin. At least that big tech bubble of the mid to late nineties ma

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