Ministry of Innovation / Business of Technology

Google, YouTube finding rights-holder navigation tricky

Now that YouTube is part of the Google family, rights-holders are lining up …

Little more than a month ago, Marc Cuban said that "The only reason [YouTube] hasn't been sued yet is because there is nobody with big money to sue." That changed when Google bought the video-sharing site for $1.65 billion. If there's one thing Google has—aside from an ever-growing index of the world's information—it's deep pockets. And now people want to get paid.

At the same time, YouTube and Google want permission to continue hosting and streaming the content that's currently on YouTube. After all, it's why people visit the site. But legitimacy comes with difficulties, especially when it's time to begin navigating the maze of rights-holders.

What YouTube is trying to do is essentially unexplored territory. While there are efficient licensing models for playing a song on the radio or using it as background music during a TV show, there is no manual on how to deal with the homemade music videos that show up on YouTube. At the very minimum, the record label, the publisher, and the artists need to be involved... each time the music appears in a different homemade video.

It's frustrating for YouTube, with CEO Chad Hurley telling the Wall Street Journal, "It's such a mess because the [entertainment companies] have all of these valuable assets that are just locked up with so many people who need to sign off on them."

Despite the difficulty, Google and YouTube are trying to steer YouTube down the straight and narrow. A team of executives from Google that includes CEO Eric Schmidt have been making the rounds with major television networks and other broadcasters in an attempt to obtain the rights to host their content. That includes content that is already present on YouTube and is drawing the millions of visitors the site sees every day. Google is reportedly offering the networks eight-digit sums for 'Net broadcast rights in an attempt to stave off DMCA takedown notices.

Even as negotiations are progressing with the networks, there are other unhappy parties that are starting to vent their frustrations. The Bundesliga and English Premier League, two of the most popular soccer leagues in the world, are displeased with the number of highlight clips appearing on YouTube. The EPL has sent YouTube a takedown notice, according to a spokesperson, while the Bundesliga is threatening YouTube with legal action. A Bundesliga spokesperson told the AFP, "we sell our rights, which include Internet rights, to our partners very expensively. These rights are being flouted by YouTube."

When I explored YouTube's prospects last month, I noted that the company's best hope was in convincing rights-holders that there's plenty of money for everyone while at the same time staying true to its roots. As we've seen in the last month, that challenge has proven to be a mixed bag for YouTube. Some of the record labels called off the dogs in exchange for equity in YouTube. Viacom asked that all of its content be pulled and has hinted that it is in talks with YouTube to reinstate some or all of it. Other deals are going to be much more difficult to make, especially with entities such as the Bundesliga that already have exclusive contracts for 'Net content.

Google's deep pockets are crucial for YouTube's future prospects, but not because it will need to pay out millions of dollars in damages. That phat wallet allows Google to write big checks to appease rights-holders. This will not only keep the content that is responsible for serving up over 100 million videos per day coming, but will also buy Google and YouTube time as they figure out how to turn the video site into a cash cow instead of the next Napster 1.0. Because at the end of the day, Google and YouTube need to get paid too.

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