SPONGEBOB SQUAREPANTS lives in a pineapple under the sea. “Absorbent and
yellow and porous is he,” according to the cartoon’s theme song. He has a
best friend called Patrick, a starfish, and works in a burger joint as a
fryer. He is also one of the most popular cartoon characters television has
created since The Simpsons, a sponge that appeals to adults and teens as
much as to children.
Until recently those without access to the Nickelodeon children’s television
channel could catch up with SpongeBob’s antics on YouTube, the video-sharing
website owned by Google. Not any more. Last week Viacom, Nickelodeon’s
parent company, launched a $1 billion (£510m) lawsuit against YouTube for
copyright infringement over SpongeBob and its other properties, which
include popular programmes like The Daily Show With Jon Stewart and South
Park. It is a legal action that has the media world enthralled and one that
will be a landmark battle in the turf war between old and new media.
YouTube is a site where people put up their own video clips of everything and
anything. Its content stretches from footage taken by soldiers in Iraq to
teenage girls from Milwaukee miming to Justin Timberlake. Its users also
post a lot of material they find on television. According to Viacom, YouTube
viewers have watched clips of its shows 1.5 billion times.
The media company, and its rivals, have been locked in talks with YouTube for
months over how much they should be paid for this content and how Google
would stop people posting material the media companies do not want on its
site.
Speaking anonymously, a source close to the legal action said Viacom had filed
its action because Google was “not taking us seriously enough”.
Google will be taking it seriously now. The legal action is being closely
followed by all Viacom’s media rivals. Some, including NBC, have already
threatened legal action of their own. NBC’s corporate counsel, Richard
Cotton, recently warned Google that YouTube was continuing to carry
unauthorised clips from the network and threatened to sue unless Google
started filtering out NBC’s property.
The clash has seemed inevitable since Google bought YouTube last year for $1.6
billion. At the time Mark Cuban, the entrepreneur who made billions selling
his web-radio firm to Yahoo in the first internet boom, predicted that
YouTube would be “sued into oblivion”. He argued that its use of copyright
material was ignored solely because YouTube had no money. With Google’s
coffers to go for, content providers were more likely to want their cut.
Last July award-winning broadcast reporter Robert Tur sued YouTube for
allowing free access to his famous footage of lorry driver Reginald Denny
being beaten by rioters during the 1992 Los Angeles disturbances. There has
been much talk of other lawsuits but at the same time media companies,
including the BBC and CBS, have cut deals with the site.
A Google spokeswoman said: “We have always recognised that when our ads appear
against another’s content, then they should get the lion’s share of any
revenue.” She said that last year Google’s content partners shared $3.3
billion in revenue from money generated by Google ads and that the company
was happy to discuss revenue-sharing with other media companies.
“Eric [Schmidt, Google’s chairman and chief executive] has always argued that
Google does better when its partners do better,” she said.
The company is also confident that it is on firm legal ground with YouTube.
Google’s defence rests on the Digital Millennium Copyright Act (DMCA) of
1998, the legal standard defining American copyright law in the digital age.
The DMCA offers what is called “safe harbour” protection to online firms
that act quickly to block access to pirated materials once they are notified
by copyright holders of specific infringements.
“The law is clear and when we are notified we remove copyright material,” said
a Google source. The source said Viacom’s action was focused on “a tiny
minority of people doing something they shouldn’t be doing”.
But Viacom argues that Google violates that provision because it profits from
the copyright material and knows the material is present on the site.
Last week, arch-rival Microsoft accused Google of having a “cavalier” attitude
to copyright and knowingly profiting from piracy.
One senior media executive said: “This is a company that really delivers when
it wants to. On YouTube they can identify spam or pornography and take it
down. They can identify hate speech. But they can’t find copyrighted
material. Come on!”
He said Google had been talking about filtering YouTube for some time but had
recently told executives at the Motion Picture Association of America (MPAA)
that it would filter only after it had done deals with the various
companies. It is a view that the executive said supported Viacom’s assertion
that Google was fully aware of the existence and the value of that
copyrighted material.
“The DMCA was not intended to allow people to cover their eyes and say they
can’t see what’s going on,” said a Viacom executive.
YouTube has forged agreements with some media firms. Its deal with the BBC
includes specially created clips from celebrities, behind-the-scenes video
and scenes from popular shows such as Doctor Who and Fawlty Towers.
Other global media firms have yet to be convinced and argue that the BBC, with
no shareholders to report to, can afford to take chances with its content
that they can not.
The legal arguments are likely to be settled in court. But even if big media
firms do manage to hobble YouTube, some argue that they will simply be
spitting against the wind.
Jeff Jarvis, a media commentator, said: “Viacom is demonising its fans. These
people aren’t stealing their content, they are recommending it. Who is hurt
if their shows are not on YouTube? Viacom not YouTube.”
He said Viacom was acting like the music companies did before the arrival of
iTunes. “Actually this is worse,” said Jarvis. “These are just clips. We are
not talking about whole movies or TV shows here.
“My son doesn’t surf the TV channels looking for shows. That’s over. He takes
recommendations off sites like YouTube. Rather than stand in the way of what
your customers want, you should figure out how to let them do it.”
Another media executive said: “We are perfectly capable of promoting our own
material, thank you very much. Frankly, we don’t need YouTube.” Another
noted that his company’s research had shown that — especially for popular
shows — YouTube was not even a particularly valuable marketing tool.
But even within the Viacom empire there seems to be some dispute about the
value of YouTube. In 2005 Sumner Redstone, Viacom’s controlling shareholder,
demerged Viacom from CBS, its news business. He is chairman of both
businesses. And while Viacom is suing YouTube, CBS is cuddling up.
Chief executive Les Moonves has cut deals with YouTube, Yahoo and the cable
operator Comcast for CBS content. “Some of our competitors say this is the
beginning of what happened to the music business. I disagree. I say it’s
better for us to be inside the tent,” he said recently.
Many media executives are betting that Viacom and Google will settle before
the case reaches court. The discovery process could be painful for Google
and the only real winners will be the armies of lawyers attending both sides.
At a recent conference Schmidt said: “I have learnt that as part of being a
player in the media industry, the way one negotiates is that everything is
leaked and you’re sued to death. So the lawsuits . . . appear to be in the
course of doing normal business.”
“It is not normal in the technology industry, I can assure you,” he added.
It looks like Schmidt is going to have to revise his definition of normal.
