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10/9/2006
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Google Sets Aside Copyright Concerns In YouTube Acquisition

Google's $1.65 billion YouTube acquisition would make it the owner of a company that observers predict is about to be hammered by a barrage of copyright-infringement lawsuits.

Despite predictions that YouTube would die a slow death at the hands of copyright litigants, Google Monday said that it plans to acquire the social video site for $1.65 billion in stock. And both companies today announced other alliances involving traditional entertainment giants.

"The YouTube team has built an exciting and powerful media platform that complements Google's mission to organize the world's information and make it universally accessible and useful," Eric Schmidt, CEO of Google, said in a statement. "Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers."

The YouTube deal comes on the same day that Google and YouTube disclosed a series of content deals. On Monday, CBS and YouTube struck a strategic content and advertising partnership to put short segments owned by CBS on YouTube in exchange for a share of online advertising revenue.

Google, meanwhile, said it had reached a deal to make Sony BMG Music Entertainment videos available on Google Video and shortly through third-party sites. It also arrived at an agreement with Warner Music Group to offer that company's content on Google Video both supported by ads or for purchase.

In the days leading up to today's announcement, blogger and entrepreneur Mark Cuban wrote in an online post that Google would be crazy to buy YouTube because of the potential liability to copyrights claims—much of YouTube's popularity is attributed to unauthorized copyrighted content and the company's business model has been likened to the ill-fated music downloading service Napster.

Similarly, Forrester analyst Josh Bernoff predicted YouTube is "goin' down."

But in a conference call for investors following Google's announcement of the acquistion, Chad Hurley, CEO and co-founder of YouTube, dismissed such doomsaying. "From the beginning, we've always respected rights-holders' rights," he said. "And we're going to continue with that mission."

Google senior VP David Drummond echoed those sentiments, indicating that technical solutions to deter copyright violations were under development, including new audio fingerprinting and metadata search technology.

YouTube co-founder and CTO Steve Chen confirmed that his company expected to have new content identification technology active in about a month.

If the deals with CBS, Sony, and Warner are any indication, the major entertainment companies appear to be satisfied that Google and YouTube are more interested in working with them than against them as far as copyright issues are concerned.

But Cuban argues that copyright law isn't on YouTube's side. "They [YouTube] are trying to push the obligation of licensing rights out on the rights holders by hiding behind the Safe Harbor rules of the DMCA," he wrote on his blog.

Like Google, YouTube insists that copyright holders who don't want their content posted online opt-out by sending in a formal notification to remove unauthorized content. Publishers traditionally took the opposite tack: They would opt-in by first securing permission from copyright holders before making use of their content.

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