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Fight me or make money with me

By Kevin O’Keefe
October 9, 2006

YouTube GoogleThis could be Google’s new mantra in light of their YouTube acquisition today. Amazing thing is both Google and those who fight them are going to win.

First bear in mind what IP litigation lawyer Phil Mann reminded me of today. The goal of a copyright owner is not to stop others from using their copyrighted material. The goal of a copyright owner is to get paid when others use such material. Getting paid requires negotiating. Any good negotiator knows you negotiate from a position of strength. Sometimes that means a lawsuit or at least the threat of a law suit.

Universal Music Group had been threatening legal action against YouTube for the last month. All they were doing was saying we need to cut a deal for your use of our copyrighted material.

Plus Universal’s threats were not scaring off Google as a suitor of YouTube as many thought. Universal and other copyright claimants like them were driving YouTube and Google together.

YouTube needed a huge revenue generator to pay Universal as well as the other companies who would soon be seeking payment for YouTube’s use of their copyrighted materials. And who better to deliver ad based revenue based on traffic than Google. Google has the best ad delivery and ad revenue collection vehicle on the Internet. YouTube had nothing close.

At the same time, Google could both acquire the top online video site at a time when consumers are rapidly increasing the time they spend viewing video online and get permission to use copyrighted materials for an ad revenue share only they could deliver.

By this afternoon YouTube cut a deal with not only Universal, but also CBS and Sony to use their copyrighted material. Universal, CBS and Sony are getting revenue they could never realize on their own. They’re also getting additional exposure for their productions whether television, music, or movies.

I expect other copyright owners to cut similar deals with Google owned YouTube. At the end of the day, the $1.65 Billion paid by Google may look like a good buy.

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