Wednesday, October 18, 2006

Content Owners -- Attack or Embrace Content "Sharing" Sites?

Are video "sharing" sites a net positive or negative for owners of copyrighted content? That is, have services such as YouTube provided a new marketing platform and distribution channel for owners of video content? Or, have such services built themselves -- and their $1.65 billion valuations -- "on the backs of" owners of copyrighted content?

There has been a recent flurry of deal-making among some sharing sites and media companies of late to resolve disagreements amongst them amicably rather than through litigation about this fundamental question (including the round of deals announced by YouTube in conjunction with the Google acquisition announcement).

But, now, there also is a new flurry of litigation. Universal Music Group is reported to have filed separate lawsuits alleging copyright infringement against Grouper Networks Inc. and against Bolt Inc. Grouper itself had been recently acquired by Sony Pictures Entertainment for $65 million. As reported this morning by Dawn Chmielewski of the LA Times, these lawsuits allege "massive infringement" by these sites for permitting users to post without authorization music videos by artists such as Black Eyed Peas and Mariah Carey.

What does this all mean?

First, it means that a lot of video sharing sites -- both big and small -- are now bracing themselves for anticipated litigation.

This litigation also underscores the continued, and understandable, confusion for those both in the "traditional" media and in the so-called "new" media about how to properly compensate copyright owners without killing this exciting new and mutually beneficial medium and opportunity. Interestingly, the latest lawsuits underscore this confusion by pitting a major "traditional" media company (Universal Music Group) against another major and "traditional" media company (Sony Pictures Entertainment, new owner of Grouper).

Copyright owners absolutely must be compensated and share in the value they help to create -- that cannot be denied. At the same time, however, legitimate sharing sites breathe new life and bring new visibility and excitement to content and present a compelling opportunity for content owners (both of mainstream and long-tail content). Individual users in these new sharing environments get excited about the content and themselves become the most potent and viral marketeers. In essence, social networks are created around individual pieces of content. And, this excitement -- if harnessed properly -- can be extremely positive for content owners.

Even in the seemingly clear-cut world of music piracy, the answers apparently are not so clear-cut amongst executives in traditional music companies. As reported in today's Wall Street Journal, "there's a growing recognition among some record executives and performers that the people who are downloading illegally are frequently huge music fans and that marketing to them may be more desirable in the long run than suing or otherwise harassing them."

At the end of the day, these of course are uncharted waters, and those treading within them must tread intelligently because the precise "right" answers are not clear cut. Dialog -- and partnerships -- need to be pursued in good faith to seize these exciting opportunities for all involved (a la YouTube's recently announced deals). The "right" answers will not please either side completely because that is part of innovating -- being outside an established "comfort zone." But, that is precisely how those negotiated answers become the "right" ones ...

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