GOOGLE’S recent £875 million purchase of YouTube, the social networking site, caught the headlines — and not just for the huge sums involved. At the beginning of last year YouTube didn’t even exist. Chad Hurley and Steve Chen, the founders of YouTube, built an online community that allows users to upload their personal video material or that created by copying and editing existing video footage. The site has a huge following — 100,000,000 clips are viewed a day.

But the site’s purchase may be at a legal price. Some of the more controversial and popular video clips on YouTube and similar sites are from films and broadcast television programmes — from favourite Premiership goals to the best comic moments in Fawlty Towers or South Park. These are copied without the permission of the copyright holders (or “ripped”) and posted for viewing online.

So does all this expose such sites to the risk of lawsuits from the big studios — with Time Warner the latest media group to make clear that it will enforce its copyright in material posted on YouTube? Clearly the sites think that they are not protected from the threat of litigation, given the removal of 30,000 clips from YouTube in the past week or so after complaints from Japanese rights holders, and the talks that Google has launched with a range of media companies to agree licence fees to allow content to be legally used on the site. Users have also been give warning that they face legal action if they upload clips that breach copyright laws.

The aim of sites is to maximise membership which in turn generates profits through advertising on the site. Some offer brands, such as Pepsi, the chance to run dedicated advertising channels. Members join to post videoclips and watch others’ and to send in comments and reviews of popular clips.

To post material a user has to agree to the site’s terms through a click of the mouse, known as a click-wrap licence. These give the site owner a licence to do anything that a copyright owner would be allowed to do, for example to copy, distribute, adapt and communicate the content to the public. Users also give a warranty that they own the copyright or at least that the content does not infringe a third party’s copyright.

But this is where the problem lies — most users don’t appreciate the full extent of copyright and other rights in the video clips being posted. Some sites contain basic summaries of copyright and most have procedures to allow users to notify them of suspected breaches. Yet a glance at some sites shows such widespread use of broadcast material ranging from music videos to prime-time network programming as to suggest a complete disregard of copyright by users.

So site owners are wide open to legal action by the real copyright owners. What can they do? Enforcing the licence terms against users will usually be pointless and it isn’t likely to help in building an online community. While the sites are not earning significant profits, the chances of litigation are unlikely to be great. At a recent gathering, however, of TV executives in Cannes, one US network manager was asked how he felt about seeing his high-budget prime-time programming ripped on social networking sites. His reply, coming the morning after the announcement of the Google-YouTube deal, was “OK — until this morning”.

Most sites emphasise that they take copyright infringements seriously and where notified of breaches will take down the offending video clips. In the US, sites must take these steps before they can claim the protection from liability offered by the relevant legislation. As well as taking down content, some sites say that where possible, they approach the copyright owner to discuss keeping the material on the site but charging users to watch it and sharing profits.

Initially, some content owners took a slightly more cautious approach to users ripping their content than expected. For some studios and broadcasters, it may be worth turning a blind eye to some breaches of copyright, at least temporarily, given that the “viral” benefits of informal online distribution and promotion can be significant in reaching new audiences. They may choose, as NBC has with YouTube, to make their own premium video material available on the site in return for better policing of copyright infringements.

But with the recent muscle-flexing by a number of studios, it seems that when it comes to infringement risk in future, the policy of Google and YouTube will be safety first.

The author is a partner in the media and communications group at Field Fisher Waterhouse LLP

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