NEW YORK - Big Media took its first big swing at YouTube Tuesday as Viacom
Inc., the owner of MTV, VH1, Comedy Central and other cable networks filed a $1
billion copyright lawsuit against the video-sharing site and corporate owner
Google Inc.
 In this still image of a computer
screen showing the YouTube website, an image of the Nickelodeon character
SpongeBob SquarePants is seen, March 13, 2007. Nickelodeon owner Viacom
Inc. sued the popular video-sharing site YouTube and its corporate parent,
Google Inc., March 13, 2007 seeking more than $1 billion in damages
on claims of widespread copyright infringement. [AP]
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The lawsuit marks a sharp
escalation of long-simmering tensions between Viacom and YouTube and represents
the biggest confrontation to date between a major media company and the hugely
popular site, which Google bought in November for $1.76 billion.
Last month Viacom demanded that YouTube remove more than 100,000 unauthorized
clips from its site, and since that time the company has uncovered more than
50,000 additional unauthorized clips, Viacom spokesman Jeremy Zweig said.
A quick search of YouTube's site Tuesday turned up numerous clips from Viacom
programs including segments from Comedy Central's "The Daily Show with Jon
Stewart" and Nickelodeon's "SpongeBob SquarePants" cartoon.
In the lawsuit, filed in U.S. District Court in New York, Viacom says YouTube
"harnessed technology to willfully infringe copyrights on a huge scale" and had
"brazen disregard" of intellectual property laws.
YouTube's soaring popularity has been a cause of fascination but also fear
among the owners of traditional media outlets, who worry that YouTube's
displaying of user-uploaded clips from their programs -- without compensation --
will lure away viewers and ad dollars from cable and broadcast TV.
Viacom is especially at risk because many of its shows are aimed at younger
audiences who also are heavy Internet users. At the same time, Viacom is trying
to find other, legal ways to distribute its shows digitally, such as by selling
episodes of "The Daily Show" and "South Park" for $1.99 each through Apple
Inc.'s iTunes service. Those shows can then be viewed on a computer or video
iPod.
YouTube says it cooperates with all copyright holders and removes programming
as soon as it is notified. But Viacom argues that approach lets YouTube avoid
taking the initiative to curtail copyright infringement, instead shifting the
burden and costs of monitoring the site onto copyright holders.
Alexander Macgillivray, associate general counsel for products and
intellectual property at Google, said YouTube was protected under the 1998
Digital Millennium Copyright Act, which gives online service providers
protection from copyright lawsuits so long as they comply with requests to
remove unauthorized material.
"We're saying that the DMCA protects what we're doing," Macgillivray said in
an interview. On the other hand, he said, "The DMCA is silent on what we have to
do if we don't get a notice" to remove material.
Other media companies have also clashed with YouTube but some, including CBS
Corp., have agreed to provide some clips to the site. CBS Corp. used to be part
of Viacom but has since split off into a separate company.
Universal Music Group, a unit of France's Vivendi SA, had threatened to sue
YouTube, saying it was a hub for pirated music videos, but later reached a
licensing deal with them.
Despite those arrangements, media's relations with YouTube remain testy.
CBS's CEO Leslie Moonves told investors last week that its pact with YouTube had
provided a big promotional boost for its shows. But he added that many big
technology players "don't quite respect the content enough," although that was
changing.
General Electric Co.'s NBC network has set up a channel to show authorized
clips on YouTube, but it recently criticized the site and Google for not doing
more to prevent copyrighted material from being posted online.
Bruce Sunstein, co-founder of intellectual property law firm Bromberg &
Sunstein in Boston, said YouTube was still in the early stages of what was
likely to be a "very long working-out of arrangements" with the owners of
broadcast copyrights.
"Finding a way of peaceful coexistence is quite a struggle," Sunstein said.
"Google's motto is 'Don't be Evil,' and you could argue that with YouTube that
motto is wearing a little thin."
Unlike the original Napster file-sharing service, which was shut down
following complaints from music companies that it encouraged piracy, Sunstein
said he expected YouTube and its corporate owners to eventually make peace with
broadcasters. "I think YouTube very much wants to be legitimate," Sunstein said.
That doesn't mean other lawsuits won't follow Viacom's, however. Now that
Viacom has thrown the first punch, other media companies may join the fray,
warned Standard & Poor's analyst Scott Kessler in a research note.
A major lawsuit against YouTube has been widely anticipated because so much
of the online video pioneer's success has been driven by easy access to
copyrighted clips shared by its users.
Google began bracing for a legal onslaught last fall when it withheld nearly
$220 million of YouTube's acquisition price in an escrow account. The Mountain
View-based company also has another $11.2 billion in cash.
American Technology Research analyst Rob Sanderson believes Viacom filed the
suit to pressure Google into setting clear ground rules and fees for the usage
of copyrighted content.
"This is all about a media company trying to protect its future," Sanderson
said. "It's not about them trying to get damages for the past sins of YouTube."
While YouTube has yet to generate much revenue, its online traffic has been
growing rapidly. According to comScore Media Metrix, YouTube attracted 133.5
million visitors worldwide in January, up from 9.5 million a year earlier.
Google shares fell $11.72, or 2.6 percent, to close at $443.03 on the Nasdaq
Stock Market amid an overall decline in the stock market, while Viacom's Class B
shares fell 9 cents to $39.48 on the New York Stock Exchange.