Dear Google: About That Deal...

$1.65 billion.

That's a lot of kittens in boxes, lonely girls and endless shots of The Fall's Mark E Smith reading English football results on TV.

Still, there will be no discussions of valuations here. There's plenty of other spots for that. This is a tech policy blog and since you'll soon become the biggest, most powerful purveyor of online video, we figure that it's never too early to start thinking about the policy ramifications of this move.

In no particular order...

1) That "moronic" thing that was hard to miss. Yes, Mark Cuban is not subtle. He said (repeatedly) that anyone who buys YouTube would be a "moron." Cuban claims to enjoy YouTube; have no competing skin in the game (though he did make the point to say he was fond of Revver); and, hoped that YouTube succeeds. However, Cuban also strongly believes that copyright issues would drag down the site and would be even be nettlesome to a deep-pocketed suitor like you...

Basically, Cuban thinks that YouTube (or Google) would have trouble using the DMCA safe harbor defense because:

• They can filter for porn
• YouTube uses progressive downloads and doesn't stream. In technical terms, this basically means that YouTube leaves a piece of the content on your hard drive so the video will replay faster. In legal term, Cuban argues that YouTube is then liable per download for copyright violation.
• YouTube is leveraging copyrighted material to profit from ads and sponsorships
• YouTube isn't a hosting company (like a ISP); they are a media company

Moreover, to those who say that YouTube is making deals left and right (and sideways) with media companies (which does say something for the need of a safe harbor backstop), Cuban asserts that it will be thousands of litigating fire ants who will file specious copyright suits to drag the company down. Ouch. He says today:

I still think Google Lawyers will be a busy, busy bunch. I dont think you can sue Google into oblivion, but as others have mentioned, if Google gets nailed one single time for copyright violation, there are going to be more shareholder lawsuits than doans has pills to go with the pile on copyright suits that follow. Think maybe how Google discloses what they perceive the copyright risk to be in the SEC filings might be an interesting read ?

Here's a response that you probably agree with from IP Democracy. (Yet, it does mean that you will need to be rolling up your sleeves in the courtrooms and in policy forums)...

I can’t imagine a federal judge allowing these “jerry rigged,” i.e. fraudulent, lawsuits to get very far and in any event, the dubious plaintiff could be liable for damages and attorneys fees if he or she lost the copyright claim. That’s a huge disincentive for someone to fake a copyright violation in order to file suit against YouTube.

In short, Cuban’s argument is crazy. But, amid all his jumbled verbiage there is a kernel of truth. YouTube is relying on the DMCA’s take-down notice provisions to defend itself against copyright lawsuits. When the copyright owner is required to police 60,000 uploads per day, the take-down notice is nothing short of a sham because it’s not practical for anybody, much less a small rights holder, to scan this much material…and that’s only YouTube. There are dozens, if not hundreds, of video sharing sites out there.

So, there are bound to be legitimate lawsuits that turn the DMCA upside down and change the rules of the game, not only for YouTube but for the entire Internet. That’s going to happen whether or not Google or Yahoo or Viacom buys YouTube simply because the copyright laws can’t keep pace with technology and new ground rules are needed.

2) You are now the leader, so lead. Last I checked, YouTube had one (very good) internal lawyer, two internal PR people and no government affairs help. While thousands might have been calling with questions and opportunities, most of what they could do was react (to a small percentage) and focus Chad Hurley on biggies like the label deals, the Allen Sun Valley conference and covers of Forbes.

Still, it didn't really matter because they had a small revolution on their side to bring them up the hype scale. Think about it. Online video was barely a conversation among techies a year ago. Yet, this Thanksgiving, you'll be able to talk about it with Aunt Edna and your sugared-up nephews.

But, now that cover photos have been taken and expectations are at their highest, it's time to buckle down and communicate both a business and policy strategy for the growth of the sector. Clearly, there will be big intersections between the two and the sooner you can talk about the democratizing power of online video and your strategy for respecting copyright while the honeymoon still exists in places like DC, the better off you will be. Get the gang together in Mountain View, DC, Brussels, etc and start hatching up a proactive (!) strategy.

Plus, suddenly, there is an entire online video industry out there who needs leadership. As we noted after the Video on the Net conference, the sector needs to get organized BEFORE proverbial things hit the fan. Online music has Digital Media Association. It's time to start an analogous online video group, and, you, Google should be a leading, founding member.

This group can leverage the tremendous growing popularity of its offering with the enthusiasm of media companies to utilize the video medium and try to create the environment for progressive laws (or self-regulatory business deals) that ensures that this is only the beginning of an online video transformation.

3) Think international. The YouTube phenomena extends far beyond US borders. Unfortunately, it is met with perplexed looks of regulators with itchy bill-signing hands. As we have oft-noted here, the European Commission is on the road toward approving their ironically named Television Without Frontiers initiative that, some say, will stifle innovation in Europe by extending a broadcast regulatory structure on new mediums like online and mobile phone video. We dove into this deep here and here is a more recent RAND study on the possible impact of this effort. Lots of noise needs to be made about this before it gets finalized. Feel free to borrow our horns and whistles.

And, while you are at it, look into Australia efforts to harmonize their broadcast regulatory structure and, gulp, give a shout out to your friends and China and ask them whether they plan for follow through on their summer promise to ban all online video that isn't on the government's Most Favored list. (P.S., neither YouTube or Google is on it).

4) But don't forget the home front. To some it may be all about copyright, but history tells us that content regulation is really where the fight is in broadcast regulation. You see that in the international skirmishes mentioned above already. Here is our conspiracy theorist cobbling on this after the VON conference...

FCC Commisioner Deborah Tate was a surprise guest at a pre-conference communications policy session...

...We weren't there, but she apparently told the gathering that the FCC would likely consider regulations to ban online videos of child pornography. As NetworkWold reports, Pulver noted this in his keynote speech yesterday and called the Commissioner's comments "a warning shot" and said that he "expects the FCC to be loud."

Yet, also yesterday, FCC Chairman Kevin Martin had a different take in his congressional reconfirmation hearings. Or did he?

According to Broadcasting & Cable, Martin said that it is ""not necessary to regulate [Internet video service] at this time."

Yet, then the brief goes on to report:

Martin said he didn't think the FCC had the authority to regulate online content, as it does with broadcast, but that doesn't mean he wouldn't like to. He told Senator Mark Pryor (D-Ark.) that he thought "all policymakers should try to make the Internet a more decent place," but said that was a challenge, pointing out that it had been challenging enough in the broadcast space, where the FCC does have authority to regulate decency.

We then go on to review precedent set in the past on cable regulation and everyone's favorite anti-MySpace bill (otherwise known as the holy-cow-I-had-no-idea-what-was-on-the-Internet bill).

5) Get in bed with strange bedfellows. An enemy on Net Neutrality might be a best friend when it comes to helping get advanced video options into the home.

6) Stay creative. YouTube had us at "crazy delicious." We fell in love and still maintain a strong relationship with the site. But, we also know that if you love a site, you must let it free. So do what you need to do to keep it strong and know that there will be all sorts of haters out there angry about every tweak you make.

At the same time, we hope you can apply this philosophy to the legal and policy fight. Lawyers and policy makers will be wanting to fight old battles. You (and your allies) need to convince them that this one is entirely different.

Enjoy,
S. Garrett

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