A Big Victory For User Generated Content

Yesterday, Judge Louis Stanton of the Southern District Court here in NYC issued his opinion in the long standing legal battle between YouTube and Viacom. It was the very threat of copyright litigation that forced YouTube to sell to Google, who had the resources to fight this fight.

This decision means that other user generated content services will not have to make the choice that YouTube had to make. Judge Stanton ruled that YouTube was operating within the framework of the Digital Millennium Copyright Act (DMCA) which says that web services that have infringing material in them must respond to take down notices but do not have to proactively weed out their services of all infringing material.

This is a huge victory for entrepreneurs and the web. I am ecstatic.

#VC & Technology

Comments (Archived):

  1. David Semeria

    I don’t know the US legal system too well.Does this opinion set a binding precedent? Can it be appealed? Does it only cover NYC?

    1. fredwilson

      this is a federal decision and it will set a precedent, not binding, but an important precedentviacom says they will appeal but this decision was very strongly in favor of YouTube

      1. Max Kennerly

        There is little doubt that YouTube was protected under the plain meaning Digital Millennium Copyright Act. The problem is the Supreme Court’s Grokster decision (discussed pages 21-23 of the latest opinion), which invented a new claim for “contributory infringement” out of thin air.The District Court here (rightly, IMHO) gave only passing references to the Grokster case, but the Second Circuit and/or the Supreme Court could disagree, and find that “contributory infringement” concerns in Grokster trump the safe-harbor provisions of the DMCA. I’d think that was wrong, but I also think Grokster was wrong (as did Lessig and the EFF).

        1. JLM

          The entire concept of “safe harbors” created by specific legislation pertinent to specific industries — as an example the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 —is almost always based upon concepts of materiality, bad intent and scienter which require proof of real wrong doing or bad faith or real evil not just coloring outside the lines or using too blunt a crayon.While I personally find it a bit silly that the recitation of the Safe Harbor Pronouncement before a quarterly earnings conference call can absolve a CEO or CFO from almost any “forward looking statement”, this has clearly had the desired impact as such lightweight lawsuits have all but dried up.Conversely, they also definitively indicate that absent such poison, anything less is an annoyance but not criminal or otherwise sanctionable behavior. And, more importantly, they dampen the ability to file a lawsuit which tip toes up to the line but does not cross it.That, by the way, is the kind of tort reform which is most welcome — reform which not only sets the standards for tortious conduct but also clearly indicates that a lawsuit which fails to rise to such standards is, in act, frivilous. It is a clear bright line which everybody can see clearly.

    2. JLM

      This was a Federal District Court decision and will undoubtedly be appealed. Until it is appealed it does not have any widespread applicability other than being a referable citation in some other case but it is not binding — other than in that District.Once appealed and decided by the applicable Federal Court of Appeals, it would be binding as precedent — or “decided” law — on all cases in that appellate jurisdiction until appealed further to the US Supreme Court.It will undoubtedly be appealed to the SCOTUS, if they can get a hearing — the granting of a writ of certiorari or “cert”.I suspect given the importance of this case that it does, in fact, go to the US Supreme Court.This will all take years to complete during which Viacom will be out “venue shopping” — looking for another friendlier Federal District Court — to try to get a more favorable decision. This is not uncommon and it is why when decisions are in conflict they are referred to the SCOTUS.The SCOTUS exists to referee conflicts between and among lower Federal Appellate Courts. This is a classic and it is going to be a long battle.

      1. Mark Essel

        I often wonder how deep the well of JLM knowledge goes. It’s answers like the above that keep me thinking, “just a little deeper”.

        1. Peter Beddows

          And how great it is that we have such a resource.

        2. JLM

          Half an inch deep but a mile wide! LOLI have paid enough in legal fees to have a building named after me at Harvard. I have bought lakehouses for enough lawyers to have my own law firm.Not only that I sleep with a lawyer and have for 30 years.

          1. Mark Essel

            I guess it’s all about the volume then :)You know what they say keep your friends close, but your enemies closer. You took that to the extreme!

      2. David Semeria

        That’s top-drawer, JLM

      3. ShanaC

        You realize this could create a situation where for a number of years the US could have different standards of access based off which Federal Appellate Jurisdiction one resides in. There goes the Open Internet initiative of Obama. I do hope that SCOTUS just picks it up and does’t let it sit in the Appellate Court.

        1. JLM

          The SCOTUS gets millions of Writs and grants cert in very few cases.I suspect that everything related to the Internet is going to take decades to litigate and resolve not differently than what happened with telecom.I suspect there are members of the SCOTUS who do not use e-mail and that certainly impacts the speed w/ which they will attack Internet and technology type issues.This is why industry wide compacts and industry associations are so damn important as they create their own virtual court system and laws.

          1. ShanaC

            Case consolidation then- because different jurisdicition having differentaccess is going to be a mess.Hopefully some of SCOTUS uses email, and definitely their clerks do, somaybe some of them can impress the importance of this case.

          2. JLM

            Unfortunately, the SCOTUS does not see its mission to create social clarity or business clarity but rather to decide the novel or othewise unresolved legal issues of the day. They are unimpressed or swayed about a bit of chaos and they must at some time turn off the tap.It is my sense that Chief Justice Roberts runs a pretty damn orderly operation and that the overall case load is an important consideration when they are loading up their docket. As it should be.Again, I suspect that they do not use the same lens as the commentators on this blog might use in deciding what is important — their use or lack of the use of e-mail being just an indicator of where that lens is focused.

  2. Scott Carleton

    I was excited about this too. But then I saw this article on Obama’s crackdown on piracy http://www.dailytech.com/ar… which killed the mood.

    1. fredwilson

      he’d better be careful about thatwhen everyone is a thief, maybe the laws are wrong

      1. Scott Carleton

        My nature is to agree with you there. But I have to be honest and say that I haven’t fully fleshed out my beliefs on the matter. However, I do know that a reaction such as one described in the article is unhealthy at best and could be extremely damaging at worst.From my experiences it would appear that the RIAA and MPAA’s business model has failed and that they are now switching to one based on litigation in order to protect their failed model. This sickens me.

        1. Andy Ranley

          no one could deny that stealing a pair of shoes from a retail store is a crime…an act of thievery against the person who made the shoes and who intended to sell them. could one make a credible argument that if the thief wore the shoes around town that the effect of the ‘marketing’ of that act and the benefit of that act would out weigh the harm done by the theft itself? i don’t think so. crazy to suggest breaking this fundamental principle to accommodate technology that makes it easy to be a thief.

          1. Scott Carleton

            You’re creating a false comparison. Piracy tends to be more about the intellectual property of the shoe idea and not the physical shoe itself. In music form, the shoe itself would be a live performance of the music where as the the intellectual property of the song would be it’s digital copy. I’ve already mentioned that I have not made concrete conceptions of the situation but I know that the current intellectual property laws are inadequate. For instance, video games, which exist purely in digital form, are a gray area in my present thinking. It is hard for me to argue that pirating video games isn’t down right stealing.

          2. Andy Ranley

            It’s a difficult new ‘system’ to evaluate, for sure. While I want to stand by the idea of ‘a theft is a theft’ I don’t necessary think it’s reasonable to try and stop the web from happening the way it seems it’s inevitably going to be happening…there is almost no way to stop file sharing (music files, video files, game programs, etc.) with a ‘permission-less approach’. As someone who worked for years in the music industry, the real effect of the permission-less approach was the degradation of a business model by theft.

          3. JLM

            If you have indiscriminantly cast your intellectual property into the ether, you have lost control.If your intellectual property is on a CD, you should be entitled to control its distribution.

          4. Scott Carleton

            I like that. A ‘seller beware’ mentality.

          5. Mark Essel

            Although I disagree I really respect your dedication and method in arguing personal ownership and IP.

          6. ShanaC

            When I wear nikes*, I honestly think I am marketing them. That swoosh is very obvious, you know.I don’t want to pay for the nikes’ swoosh per say- I want to pay for what the nikes swoosh stands form- a really good insole and that it hopefully stabilizes my feet so that I don’t walk around going “OWWWWW!!!!” That’s the thing I’d be stealing- the insole. I wouldn’t be stealing any swoosh and marketing campaign about the insole (I mean, I’m mostly a lady, how would you know if my feet hurt or not)And there are definitely some days, where yes, I do think clothing should be hella cheaper maybe to the point of free- since I am covered with an ad that says something like A|X on a cotton t-shirt. I would (and generally do) gladly pay more for a shirt that doesn’t have a label on it. Good taste precludes me from turning into a marketing outlet.*I don’t wear nikes. I wear asics because of my shoe size, and they don’t, for the record, have large marketing swoosh like things on it. Thank God.

        2. Mark Essel

          It’s a natural cycle Scott. The fallen incumbent desparately clings to any options in hopes of surviving. The truth is the current content ownership system is already dead, it just doesn’t know it yet. What comes in it’s wake is for companies like netflix and individual artists to decide.

          1. Scott Carleton

            It’s a natural cycle but I believe our current regulatory structure exacerbates the fall. The bigger they are the longer it takes them to go silently into that gentle goodnight.This is something I have seen in many sectors. From a recent wired article about waterless urinals (http://www.wired.com/magazi… obstructed by plumber unions to the 50 year campaign against nuclear power in the energy industry. It disgruntles me because I believe that a true free-market is supposed to diminish the time in which failed business models stick around. However the use of barratry (persistent lawsuits (new favorite word)), media spin, lobbyists and back door capitalist insurgency techniques such as funding a ‘grass-roots’ movements to market for you (greenpeace comes to mind) really delay the inevitable. It delays and hinders the flow that is inevitable.Essentially what I am saying is I abhor obstruction of inevitable improvements.

          2. Mark Essel

            To improve the efficiencies of our societies selection of value requires perfect knowledge of the above. Part of the “systematic sluggishness” is uncertainty from all parties.Agree that we respect the dying giants too long.

          3. Scott Carleton

            I guess it’s something I have to learn to live with to a degree. Value of course, is not objective in our world and therefore perfect knowledge is unattainable.

          4. Mark Essel

            Don’t let my rationale dissuade you though. By all means, speed up the process 🙂

          5. Scott Carleton

            But of course! Deeming something as impossible to change is self defeating. I wouldn’t be part of this community if that was my temperament!

      2. RichardF

        The revenue model needs changing but the law is not wrong. I strongly believe that artists have an absolute right to copyright.I was in my local Starbucks a couple of months ago and got talking to a guy that turned out to be a US Country and Western singer. We got talking about piracy and he told me about his last gig where he was signing cd’s; two girls came up to buy his two cds they openly discussed in front of him that they would buy one each and give each other copies of the other one. He said nothing because he figured at least he was getting something rather than nothing. Illegal downloading has created a moral disconnection.

        1. fredwilson

          If music was available like dial tone and you paid a couple bucks a month to be able to access all the recorded music ever, two things would happenPiracy would be eliminatedArtists would make a lot more money

          1. Scott Carleton

            This I agree with. The success of the iTunes music store shows that the more accessible content is, the more likely people will pay for it and download it legally. The medium seems to be the problem. Maybe not the whole problem but a large part of it.

          2. JLM

            If you think about it, this was the primary function entrusted to the “label” — get the music played on radio stations to create customer demand and then get that customer demand fulfilled by SELLING them the music.The label controlled the cash register.Now what has happened is that the Internet has become the radio and technology — the ability to copy directly — has bypassed the POS.Shortening the channels of distribution and reducing the cost is part of the genius of the Internet. One can buy directly from the producer. The marketplace created this monster and now acts surprised that the beastie has a voracious appetite.

          3. Harry DeMott

            And what would you pay for this service? Rhapsody essentially offers it (but I would argue in a bad form factor and without a lot of the services around it that are necessary) and almost no one subscribes. Yet almost 20M people pay XM/SIRI $10 per month for a service with far less choice.

          4. fredwilson

            Xm / Sirius is in the car and rhapsody and the others are only now arrivingvia android and iPhoneI have been paying rhapsody roughly 30/month for a decade for two accountsI have also subscribed to many other music subscription servicesI think the price is too high and we need the auto companies to get behindthis modelBut it is the future

          5. ShanaC

            rhapsody though is losing customers.

        2. JLM

          The interesting thing about that exchange is that those two girls did NOT KNOW they were doing anything wrong. You cannot enforce laws that nobody knows anything about. It may not even rise to the level of morality as it betrays pure wholesale ignorance — special of the month?

          1. Donna Brewington White

            Excellent point. My teenage son’s friends think nothing of piracy — literally “nothing” because they don’t even know what it is. His age group is a huge consumer with iPods that have become a part of their bodies and much of the music pirated. My son knows because we live among a community of musicians and are adamant about this! We see firsthand the relationship between the craft and livelihood. Most people don’t understand that relationship — that someone is feeding a family with those earnings. Okay, yes, some are living in multimillion dollar homes in Malibu, but they have a right to earn that privilege and it’s earned one CD or iTunes purchase at a time!(We give a lot of iTunes gift cards as gifts to kids. Our contribution to the cause.)

          2. Harry DeMott

            My daughters have no idea even how to buy music. WE listen to Pandora in the home – one of out 8000+ songs that we paid for over the years – but increasingly, the girls (10 and 8) are simply going to youtube and looking for songs. For popular music – we do have a musical dialtone – and it is free!

          3. Donna Brewington White

            I think we need to check into Pandora.BTW, this gives me an opportunity to say how much I enjoy your comments on AVC. You are one that I look for as I scroll through.

        3. PB

          2 CD’s sold would make the country singer roughly $14 wholesale.But 2 girls at a concert who bought tickets would have probably made him about $40 (on the low end).If the other girl didn’t get that CD for free he might have only had one fan instead of 2.So, in losing one record sale he made even more money on a new fan who buys a ticket to his concerts.For music, free isn’t necessarily a bad thing.

    2. JLM

      The Obama administration’s utterances fall into the category of “unintended consequences” as their copyright focus is on software, luxury goods and larger products (physical knockoffs) and are primarily focused on the issue at the “sovereign nation” — read CHINA — level.I think from a global perspective copyright laws are, by and large, not enforced. China is a lawless frontier with no Sheriff as it relates to copyrights. They not only do not respect copyrights, they “reverse engineer” anything they can get their hands on with such a voracious appetite that they advertise their ability to do this very thing.Bring any product to China and they will make you one from software to Coach purses to Honda engines.The Internet is global so the prospect of getting it to behave in accordance w/ the laws of a single nation is not bloody likely.There is an interesting exemplar for how this all plays out — Internet gambling which has now proliferated to the point that the war has been lost before really the first battle has been fought.

      1. Scott Carleton

        I tend to disagree with laws that can’t be enforced because they undermine authority as a whole. There is a moral side to this and a practical side. The practical side is what needs to be enforced by gov’t.On Hacker News I did see one interesting comment that declared that copyright was not a moral right which I found to be an intriguing line of thought http://news.ycombinator.com…. Obviously the Chinese don’t feel that copyright is a moral right. Maybe this is an American creation?

        1. ShanaC

          Lockean. Very British-American. we’ve also really changed the way copyrights work in the past 30-40 years. They were less”idea oriented” and had to be firmly copying the item itself, which had to explicitly be copyrighted, which was shorter, and covered less objects. Bags and Music were not copyrighted in the sense that they are today.

        2. JLM

          A copyright is a property right affixed to a man’s labor. China respects neither property nor individual labor and thus it is no great surprise that they cannot even fathom the concept of a copyright. It is a meaningless piece of paper based upon an unrecognizable concept.

          1. Scott Carleton

            Makes me wish I knew more about their culture and why this is the case.

          2. JLM

            Have you read James Kynge’s China book — China Shakes the World? It is a great read and Kynge who speaks Mandarin and has lived in China for 20 years while writing for the Financial Times has uncovered some very timely insights into real world happenings — not just a bunch of unfounded opinions.I am fascinated by China. In the next 50 years the world will be dominated by a country that is just now hesitantly coming onto the international stage. The implications from an economic perspective are incredible.While I do not subscribe to the “China has all of the American debt” hysteria because they have to keep us healthy to make their holdings worth something, I am convinced our future will be dictated more in Beijing than Washington.Within 100 miles of the coast, China is the most capitalist and entrepreneurial country in the world while in Beijing it is still an oppressive dictatorship which wants to look better than it really is.I truly worry that the Chinese will take advantage of America’s tautly stretched military and the feckless Obama adminstration to seize Taiwan. We shall see their real face shortly in N Korea.

          3. Scott Carleton

            People forget that ‘China holds all our debt’ really translates to ‘We own them’.I am also fascinated both with their history and their possibilities not to mention what they are doing presently. Thanks for the book recommendation. I’ll look into it.

      2. ShanaC

        Oh they are definitely not enforced- go to chinatown in manhattan and see if you can’t buy yourself a LV bag. At least you can really feel the copy, and hold it in your hands.

  3. Andy Ranley

    How then do ‘entrepreneurs and the web’ suggest the creators of professional content (like The Daily Show, SNL, ESPN Sports coverage, etc…content that is costly to produce and has been the massive driver of use and growth of YouTube) continue to benefit from their creations?…and the old argument that a ‘video gone viral’ creates a wider potential audience for the creator and is ‘like marketing’ imposes a business model disconnect because all that really happens when a vid goes viral is more people watch it…the creator gains no ability to sell advertising for these new eyeballs (as they do within their original broadcasts on television) and there is no credible study I’ve read that says sales always or even generally increase because a posted video that violated copyright rules went viral (there may be some discrete examples, but no wide-sweeping intelligence that says ‘viral will drive more sales/revenue’). Is their no legitimate middle-ground between the ‘seeking forgiveness’ approach towards infringing uploads and an open uploading policy that seems to get violated every second of every minute of every hour of every day? It becomes a losing proposition to invest in content over the long run without some middle-ground policy.

    1. fredwilson

      i spend a small fortune every month on content between my cable subscriptions, my music subscriptions, my web content subscriptions, etcpaying for content is very much alive and well

      1. Andy Ranley

        how do you then explain the decrease in ad revenues for highly abused ‘viralized’ vids that drove viacom to sue googe/youtube?…and paying content is NOT very much alive and well not for the cash strapped college aged or high school aged kid who doesn’t have a money. in one simple silo, apple themselves has acknowledged that nearly 100% of material that people have on iPods was obtained without paying for it (either through iTunes or other)…it would be ridiculous to suggest that a college kid with 40,000 songs in their library forked out about $40k for this.

        1. fredwilson

          why should he fork out $40k for 40,000 songs?music should be “dial tone” and cost something like $2/monthi currently pay something like $30/month for about three or four music subscription services

          1. chrisdorr

            While I agree with this decision, I also agree with Andy’s points. If content creators do not get paid for their work, the content we love to consume will decline in quality. There is no easy solution to this. And I think a huge gulf still exists between the technology community and the creative community over this issue.As for college students, I would say the following–my son who is in college and is in a band firmly believes that content creators should get paid for their work. He is creating songs with his band and recording them with the intent that they generate income for him and his band mates. He and his band mates understand the business of music publishing and recording and have made a deal with a recording studio where they retain certain rights and split certain revenues with the recording studio they are using to create their songs.They already record themselves using Logic and ProTools but they also recognize that a well trained sound engineer/producer and a state of the art recording studio allows them to create higher quality music, which has a better chance of reaching a public. But a public that pays them for their “sweat equity”, just as technology start ups look to get paid for their “sweat equity”. Everyone should have the opportunity to be paid for their work. The question is how do our laws and content delivery systems make that happen.

          2. mydigitalself

            The content creators need to catch a wake up in terms of their distribution. As Fred pointed out, paying for content is still very much alive and well but when you create artificial scarcity with content you drive people to free and grey market alternatives.I’ll give you a good example of this – thinking global. I recently heard rave reviews for South Park’s 200+201 episodes on Season 14 all over the internet. Guess what, not available here in the UK on the premium satellite package I have that I pay huge sums every month to receive. Not available on South Park Studios website because the content is not available in my location. I’d happily pay $3.99 to watch each episode, but I can’t. So I turned to Vuze and torrented the two episodes. Two days letter I get my first take-down notice warning from my ISP.

          3. marvinavilez

            @chrisdorr, Your sons band has been created because of a passion. I think that the people that really care about music and understand what it takes to push the movement forward, understand and are willing to pay. I can see a service (just like the hat that goes around at small music venues) where people pay what they can. Let the music move freely and promote that listeners pay what they can/when they want to. The service would then payout to the band the amount collected (minus overhead)….kinda like an open source payment/royalty service provider. More and more bands are putting music out and allowing the public to pay as they go.

          4. chrisdorr

            Yes, I agree that new models are emerging that can allocate payments to bands and it is great to see them. The real issue is, for me, is that the band, as the creators and owners of the music should be in the position to decide what model or models are to be used–no one else. It is their property–they should decide how it is to be monetized and distributed. That is something that my son’s band, who are as sophisticated as anyone when it comes to all things digital firmly believe–and who of sane mind would disagree with that notion? If they want to give it away or severely restrict it at a high prices–it should be solely their decision.

          5. marvinavilez

            Agreed…..then I find myself in this loop…..How does your son enforce the “severely restrict it at high prices” option? I guess that is what this thread is all about. Enforcement = Cost, More technology = Cost, Legal Action = Cost. If they have the money and time …then they can enforce (I think?)

          6. chrisdorr

            You are right, there is no easy solution. My guess is like other bands, they will give some material away and try to find ways to sell songs while building a fan base. The interesting thing is–no band has ever become a mega band (i.e. hugely popular) without huge CD sales backed by a major record label. The question is, when will a mega band be created solely in the digital realm–without major record label support? Or has the era of mega bands slowly drifting away?

          7. ShanaC

            Look at hypem.com- very few of the bands listed are mega bands the way they once were.

          8. Andy Ranley

            Fred, I’m not convinced that subscription models enable the financial circumstance in which content creators can be rewarded to incentivize continued creation. Without a credible alternative business model that incentivizes the content creators I have a hard time supporting the subscription model or the ‘permission-less’ approach. It benefits you, but as Chris points out, the quality of content will decline.From another one of my comments…”It’s a difficult new ‘system’ to evaluate, for sure. While I want to stand by the idea of ‘a theft is a theft’ I don’t necessary think it’s reasonable to try and stop the web from happening the way it seems it’s inevitably going to be happening…there is almost no way to stop file sharing (music files, video files, game programs, etc.) with a ‘permission-less approach’. As someone who worked for years in the music industry, the real effect of the permission-less approach was the degradation of a business model by theft.

          9. ShanaC

            If he doesn’t get found- does he deserve to get paid? One of the best items I’ve ever heard about content is that content doesn’t pay per say- it’s the ecosystem around content (eg for a band- that would be live performances)If he doesn’t get found- that ecosystem doesn’t develop. Same with startups. At least with startups there is a semi-efficient marketing pattern between both social marketing, SEM, and other more direct forms of marketing- with bands they stick you on Billboard, put you in commercials, and stick you on MTV- but only after you already partially make it.Startups don’t work like that. You can be midsize and generating a huge return in relation to your overhead of employees. There seems to be very little in the way of niches for the midsized- and that needs to change.

          10. Mike

            I think the reason 40,000 songs cost $40,000 is because that’s what the market says their worth.And since these songs are all available for free online, many people who both a) want large quantities of music and b) don’t want/can’t afford to pay for them, choose to illegally acquire them over paying for subscription services.I suspect portability is one of the primary problem here. Pandora solves some of this, but you can’t choose the songs you want to listen to.Are you able to download songs via Rhapsody and put them on an iPod?

          11. fredwilson

            soon we won’t need file based musici rarely access my files and i have a huge library of mp3s that i paid for

          12. ShanaC

            Music should be $2/month. Finding and creating good music is a lot more expensive. And note that finding==discovery && finding != searching.Though even at $2 -would all the people you listen to get paid? I think the money for musicians is definitely in the finding of them- maybe they need adwords for music.

      2. Chris Hamoen

        Re: music, people keep forgetting that the artist cut isn’t that big if they took a bad deal with a label…which happens when a high school kid with big dreams of the rock and roll life style is pitched.http://www.salon.com/techno…I will pay for the artist and the music they create – but I hate paying for mass marketing machines.Re: video. Let’s not forget us Canadians up here (/wave!). I click on that Jon Stewart video you linked to Comedy Central…but oh no! I can’t watch it – I have to go to Comedy Network and dig it out. We all know why – but will be interesting to see how this changes. Content doesn’t have borders.

      3. RWK: disruptive tech/guerrilla

        Fred, I produce mp3 lectures, how to videos, etc with the full expectation of losing revenue to piracy. BUT I’ve structured piracy into my marketing strategy. It’s a win either way.

        1. JLM

          What kind?

      4. Prokofy

        So pay a subscription on Youtube too then Fred. Oh, you can’t, they don’t have that.

        1. fredwilson

          they will, so will Hulu, and you’ll be able to get any cable channel you like over the Internet for somewhere between $0.50/month and $5/monthsubscriptions are the future of content

    2. JLM

      I suspect that media designations will swiftly become discriminating between those producers who “fire and forget” their creative product out into the ether and those who produce a tangible piece of creativity (CDs) which trades like a bunch of bananas.If you shoot product out into the ether, I suspect it will be difficult to argue that you control the means of dissemination while if you are showing content in movie theaters or on CDs you will ultimately get a much more sympathetic legal hearing.I suspect that how many times you use the creative product and how you use it will be the next legal issues.If you record something for later use — no harm, no foul — just a timing issue but if you use the creative product to create a discrete and verifiable revenue stream, one should expect to share that revenue stream with the creator perhaps not in a punitive manner.

    3. andyidsinga

      Creators of professional content need to learn how to use new media, learn how to harness disruptive technology and get involved in disruptive business opportunities. This is required even when they may eventually disrupt their own mainstream business.The Daily Show and Colbert have full episodes and clips on the web and they are somewhat shareable – which means they’re starting to get it.I’m not trying to suggest its easy to do – but they must do it nonetheless. Clayton Christensen talks about this quite a bit in his writing.The ability to publish video online was not the disruptive part of the system – The disruptive part was the ability to share in the new media – and the key thing established media didn’t get (IMHO).

  4. Pb

    This will usher in a supercharged era of “Develop first… ask for permission later.”

    1. fredwilson

      permissionless innovation is the best

      1. Chris Hamoen

        Couldn’t agree more.

      2. Prokofy

        Yes, I understand that you Bolsheviks hate having to pay for your manufacturing costs that you like to advertise as free.And you want people to pay for your innovation but not the innovation of the content-makers that are ripped off on these services.Understood, yes.

        1. fredwilson

          i am happy to pay for content prokofy and i think i pay well over $1000/month for content in my family.what i am not happy to do is wait for permission to innovate that will never come from the establishment

          1. Prokofy

            Could you cite an actual concrete, personal example where “permissions” that are on some content are preventing you from innovating?I don’t think it’s because you want a picture of Minnie Mouse to decorate this website, Fred.So what is it, really?I have to say that a lawyer who tries these kinds of cases said it very well. You all use the California business model. That model involves putting up a platform, inviting the masses for free or for freemium low-cost subs, then looking the other way while they “share” content that is purloined from music and video sites for which those platform providers have not paid licenses, and for which those individual users seldom pay.It’s a racket. It’s criminal. It says “it’s ok for me to steal volumes of content to draw traffic and people to click on my ads or buy my virtual stuff”.And then you dress it up further with an intellectual freedom patina by saying you can’t ‘innovate’ because you can’t fund a platform that steals.I’m not getting this, Fred. You seem like a moral person with a solid moral background.

          2. fredwilson

            Easy. Boxee

          3. Anthony Ortenzi

            Are you missing that copyright exists to promote the useful arts and sciences?You can take a Lockean view and say that property rights are natural, and that intellectual property is the fruit of one’s labor and thus his own, but from a legal standpoint, the basis of copyright protection is to enlarge the giant shoulders upon which successful growth must stand.The victory here isn’t really about permission, it’s about having established a legal framework that lets people know where they stand. It’s about there being rules that both restrict and protect. The DMCA is VERY slanted towards original content creators, and it’s about time for there to be some limits to the powers granted to those content creators or licensors.Ultimately, if government does have an interest in “promot[ing] the useful arts and sciences”, limits on copyright and fear of irrational enforcement or harrassment must exist. Neither is this an endorsement of using Viacom’s stuff on Youtube nor is it ultimately where we need to be. The DMCA is still broken, but this is really the first example I’ve seen where there’s hope that maybe it will get fixed.WIthout some kind of fix, IP law will be so irrational that nobody’s really going to care, and it’ll only be enforceable with steel bars or lead bullets.

      3. Fred T

        This is where creativity flourishes. No limits…

  5. Dan Ramsden

    There was an article on GigaOm earlier (can’t find link) suggesting that this decision could prompt other content owners to move more decisively to YouTube, rather than staying focused on Hulu… if I understood correctly. I don’t get the rationale. Did anyone else read this and can someone explain? Thanks.

  6. gorbachev

    A quick reading of the opinion seems to imply that services wouldn’t necessarily have to bend over backwards to pacify content producers by implementing means to detect/intercept copyright infringing content pro-actively any more.Any legal minds want to analyse that further?I always thought it was interesting that the content producers could basically “tax” service providers by demanding (under threat of lawsuit) them to implement expensive (and often counterproductive) filtering/blocking/whatever technologies.

    1. JLM

      I suspect that producers will begin to implement technology which will impair the presentation of their content — much the same as photograph companies place a large disclaimer or identifier across the front of a photograph when you are reviewing their catalog in order to prevent piracy — unless they have been compensated and have removed the impairment.The photo libraries have been doing this kind of thing for years.Producers will not go down without a fight and where they can find a revenue stream that has been created with their copyrighted product, they will try to get a share of the revenue stream rather than litigating the original wrongdoing.

      1. ShanaC

        We’ve been doing this for years with software unproductively. Ask students/newly employed people about bittorrents and Adobe products- Clearly they overcharge for a large chunk of their software.Same with music/dvds. They DRMed the object with the media on it, some people went ahead and cracked the DRM. it got so bad that I think Sony? started to install a rootkit- which caused viruses to be infected on machines. it’s why it is a hotly contested space and all these licensing deal politics drive people up the wall.

        1. Prokofy

          DRM is a good thing.So are software licenses.People need to learn livlihoods besides Fred.

          1. ShanaC

            I know that.However, I don’t think damaging other people stuff with a rootkit is a goodway of protecting your content. I don’t think people, especially big labelpeople, doing illegal activities to protect their revnue stream is right. especially when someone bought your content on a cd: 1)buy content fromSony on a cd, Sony damaged someone’s stuff by installing a rootkit which allowed malwareinto the computer, with code that they broke the liscences to (the Rootkit’sbase code was created with GNU based code, for the irony’s sake). So bydoing the right thing- buying the CD- Sony got to damage people’s stuff. Which is illegal.That’s the extent DRM went. And it’s untenable. A different model has to beheld up.http://en.wikipedia.org/wik…No one thinks that paying for content is wrong, there are some questions asto what constitutes “the content”- there seems to be universal agreementthat it should be paid for. It’s how to pay for content, and to whom, andwhat the distribution model should look like. In the meantime- I do takeoffence that for things that may not even be content since that is now anargument up for discussion (they may be derivitative works- why is theperformance not content per say?) – that someone else seems to take up theright to hack my actual machine at will. Or at least used to.

          2. fredwilson

            drm is dead

          3. Prokofy

            DRM works fine in Second Life, and is what enables the economy to generate $550 million in transactions of which $55 million is taken out of the virtual world in real dollars for entrepreneurs. DRM is what makes online entrepreneurship possible not just for big venture capitalists like you, and big IT like Google or Twitter, but all kinds of little people.I don’t notice Farmville getting hacked and its tractors being distributed for free on game gold sites, Fred, either.You’re fixed on the fact that you personally can’t copy your tunes from one device to another. That’s not enough of a reason to undermine the livlihoods of many creators.

          4. fredwilson

            Farmville and all zynga games experience stolen virtual goods all the time.They end up on the gray market. Just like real life

      2. Prokofy

        Yes, and they are right to do that, and you’re silly to suggest that music companies should go chasing zillions of teenagers for ‘wrongdoing” when it is the platform provider who is indulging their criminality.

        1. JLM

          Silly — silly is my middle name but unfortunately I did not “…suggest that music companies should go chasing zillions of teenagers for ‘wrongdoing’…” as you indicate.Just the opposite, I “suggested” that producers would try to get a share of any revenue stream that resulted from the piracy. Get some of the money, don’t try to nail the door shut.Work on your reading comprehension, please, dear.

        2. AgeOfSophizm

          The platform provider is simply disintermediating the record labels which is long overdue. Musicians can still make money of their works in several ways. DISINTERMEDIATION – get used to that term and it’s moral implications.

    2. Mark Essel

      Right on Gorbachev! The enforcement of ownership of information is a shared financial responsibility. As a service you don’t necessarily want to encourage theft but policing it is no small cost. We should look to operating systems design and security for best practices. Careful logging is often enough to identify inappropriate behavior.

      1. Prokofy

        What are you smoking?!Paying for content up front is the solution. If Google won’t do that in the form of large licensing fees to these big music companies — which they should, and should be litigated against until they knuckle and do that –then consumers should have to pay to access in the form of subscriptions.One or the other system will be coming to these services, as they can’t go on using piracy and highway robbery of content and expect the big content makers and holders to be fleeced forever.

    3. Prokofy

      And why couldn’t they do that, Mikhail Sergeyevich?!Why can’t they demand blocking of theft of their content that Google didn’t pay for in the first place and allows to be uploaded freely?

  7. Clark Liu

    I am not hundred percent sure how will this opinion affect the wars between CHINA’s video hosting companies, youku.com, ku6.com, tudou.com, qiyi.com, etc.?

    1. JLM

      China is elemently a lawless frontier with no Sheriff when it comes to these type of matters unless you infringe upon THEIR ability to block content or otherwise censor what their people can access.

  8. Mark Essel

    Shall we batoosy? Pardon me. Adam West’s bizarre wisdom has infected a disproportionate amount of my memory.Hey, this could issue in a new era of opportunity for police bot software and copyright search.Does this give torrents a leg to stand on?

  9. AlexHektor

    YESYESYESYESYES!!!I love it.Let’s have a party! ^^This is definitely among the best news for entrepreneurs, no, for HUMANITY in the last few years..

  10. skysurfer172

    “Presently, over 24 hours of new video-viewing time is uploaded to YouTube every minute.”That’s just impressive.

  11. Scott Carleton

    Posting a copy of a comment from Hacker News that I thought was interesting and relevant to the discussion. http://news.ycombinator.com/item?id=1457146“5 points by techiferous 12 hours ago | link | parentHow is music piracy different than the following scenario:(1) I quit my day job and decide to launch a web-based startup.(2) I base my business plan on a monthly subscription model.(3) I achieve product/market fit and revenue starts coming in.(4) A technology emerges that magically makes it easy to copy my SaaS app and use it in its entirety without paying the monthly subscription.(5) My revenue plummets and I have to completely revamp my business model or go out of business.This is not a rhetorical question. I honestly want to know what is the difference. Thanks!” (Not sure about the etiquette on this, should I have asked for the commenter’s permission)?

    1. jchewitt

      Software has dealt with this issue for a long time. It’s turned out to not be as apocalyptic as the doom sayers said it would.

      1. Scott Carleton

        Would seem that way right? I love it.

        1. Mike

          Devastation is all relative it would seem.

  12. Liam

    Will be interesting to see what happens next. This could all go away on appeal – hopefully we don’t have to wait three more years for the answer. Also just as likely that the battle shifts to the Hill – Viacom (National Amusements) is one of the top 10 spenders in lobbying on copyright issues:http://www.opensecrets.org/… ….and the white house just kicked off a national copyright policy review:https://www.eff.org/deeplin…Regardless, I suspect Viacom has already accomplished many of its goals in filing the suit. The open video sites that make up the bulk of the market have become much more strict about self-policing and building systems to block large-scale infringement. Which ultimately will strengthen their businesses and the industry.

  13. Doug Kersten

    Me too!!!

  14. Doug Kersten

    Me too!!!

  15. Vivek Jain

    True… Youtube got what it wanted.But a simple for or against Youtube is not the answer. Instead we need to dig deep and understand that the fundamental basis on which laws of society are based is that they need to keep changing with the changes in society. So Youtube gettin what it wanted is because there are tangible changes in our society in this decade.. now artist and content creater need to earn there bread and butter which cannot be ignored and i appreciate that the quality of content will decrease if they dont have a means to earn from ther effort. The only thing i see here is the content creators need to be more creative now in findin streams of earning . . eg: a band can look at live shows and merchandise

  16. de la Mothe

    @fredwilson “a big victory for user generated content”

  17. Eric Leebow

    This is very big win for entrepreneurs in this space, or those going into the video space. This can be related to any site with video or any content. It makes it much easier on the site, as you could imagine how many videos they would have to weed through. This would be impossible for YouTube to monitor. What’s also interesting is how YouTube has previously suspended users who upload videos of concerts of famous musicians which people have already bought their music.

  18. Fred T

    And as Chad Hurley pointed out on his tweets, “Today is a good day for YouTube… a good day for the Internet!! Excited to finally share the news… http://bit.ly/7JJSz8

  19. ShanaC

    If this means more music, videos, etc is going to be out there- there is going to be further developments in how to sort through it all. The labels and TV channels were supposed to do that for us- if this is a sign that this system is failing, then I guess we are still looking for a good replacement for surfacing what top quality content means to us as individuals and as groups.I think I am going to celebrate by looking up “Bitches Brew on youtube though”

  20. Sfraise77

    This is excellent news!!My site has a similar user controlled video section similar to YouTube, this takes one more worry off the table for the moment. However, I’m sure we haven’t heard the last of this fight.

  21. Prokofy

    No, not a victory, but only a temporary loss. Viacom will keep fighting — good!Google shouldn’t win this, they are an evil monster sucking up content for free from content providers and selling their ads with it, then coyly blinking as people struggle to file DMCA takedown notices or launch lawsuits.It’s not about pro-actively weeding — a way in which copyleftists like Fred always phrase it to make it sound like some mammoth task would be involved. It’s about paying for licenses to content to the large music companies in the first place for all the content users upload freely. Different.

    1. fredwilson

      paying upfront licenses only serves to maintain the status quothe licenses costs millions which no entrepreneur can affordso the innovation doesn’t happenthat is what i am fighting againstwhat i’d like to see is a compulsory license like we have in internet radio

      1. Harry DeMott

        Perhaps a modified version of that compulsory license. I only know of one company that is at all thriving under the existing license model. There should be more.

  22. Tyler Beerman


  23. Toshi O.

    Wahoo!A win for all MMA fans

  24. George A.


  25. David Fishman

    +1 UGC … long ecommerce 🙂

  26. Harry DeMott

    I meant to comment yesterday – but it got away from me.This decision may have been a fantastic decision for entrepreneurs and the web – but it was not such a great decision for property rights.In general, I think that Google was clearly wring in taking Viacom’s intellectual property and putting it up there to spur growth – and Viacom would have very likely won the case – if it weren’t for the fact that Viacom management itself condoned using YouTube as a marketing arm to try and drive people to their shows.You can’t have it both ways. If you put your material out there in the public domain – then you can’t cry foul later when you lose control of it.That said, I don’t see how this is necessarily a great precedent for property rights in the U.S. When you start taking stuff and asking permission later because you can’t wait for the owner of the property to sit down and do a deal with you on terms you find mutually acceptable – you set yourself up for a lot more eminent domain decisions.So for the public good – should we simply put all music in the cloud – and charge consumers for access – and remit $2 per user per month to Sound Exchange – claiming it is good for the citizenry?How is that right?Let’s face it – the copyright holders in America (and here I am referring largely to the big music and tv companies) have screwed things up massively. They’ve made almost every misstep imaginable – and have driven people to steal their product without thinking twice about it.I do think a lot of this will get settled soon. If you take a look at the evolution of competition in the wireless business – you competed on coverage, and features on your phone, and now data coverage and speed etc… Sooner or later, Apple and Google are going to have to compete on features – and music is the killer feature – I predict that pretty soon – one of these guys will do a dial tone like deal with the labels – and it will be subsidized by the wireless companies who want subscribers to grow their business. Once one guy does this – everyone follows.Great for the labels – great for the companies that can thrive in that world – and great for the consumer.

    1. Peter Beddows

      Harry:Your comments really sum this discussion all up in a nutshell touching, as it does, on the most salient points made separately by others in this thread. I like your conclusion. Fred opened “pandoras box” (meaning the metaphorical Pandora, not the service named Pandora) and you have come up with a lid for it. /psb

  27. Matt Weinberg

    One thing I’m curious about– Fred, the tone of your post implies that you felt YouTube sold too early, or didn’t make the best selling decision at the time. Is that the case?

  28. Mark Essel

    Netflix is the video equiv Charlie. If they’re making money and the content sellers are satisfied it’s working

  29. Dave Pinsen

    +1. I suspect in Fred’s “dial tone” model the biggest artists might make more money, but I wonder if a lot of smaller artists would make a lot less. It would be interesting to see a model of this.

  30. Mark Essel

    Neither artists monetization should negatively impact the legality of the others ability to earn a living. But one could definitely profit more than anotherWould love to sit down and hash out a model that works with you Charlie. Next time we share a city 🙂

  31. Donna Brewington White


  32. Jared McKiernan

    I suspect the number of artists total would decrease significantly in this model- being a rock star would no longer hold the same draw to every mediocre high schooler with a guitar and a dream, and these bands, which end up spending way more than they bring in, would become much less common and move toward hobby status if this type of kid even gets interested enough to form a band in the first place.I think smaller artists might actually do a lot better than you’d expect in this model, at least compared to how they did under the record label model. Smaller artists who know how to market themselves should be able to pay for their expenses on tour at least.There is certainly not enough money to support the mass of redundancy in music today however; I just hope that when things shake out money is available to support more talented artists rather than mass-marketers interested in fame and following the next big thing. I could see it going either way; even with all the niche performers putting out great music/books/films there seems to be a superstar class drawing perhaps more interest and revenues than ever before. Avatar, Twilight, Potter, et. al.Perhaps I missed this, but could anyone explain why it is called the “dial tone” model?

  33. Harry DeMott

    My guess is that you would have to share the $ based on popularity – or number of plays if people get to decide what they want to hear. For all the songs in iTunes there is a very small % of them that have generated almost all of the revenue and plenty that have never been sold – or sold only once. Pandora has almost 750,000 songs in its database – and in the last month over 80% of them have been played (and that 500K is way more than the number of iTunes songs I was referring to) What you need is a musical dial tone – as Fred suggested (I don’t think it is going to work at $2 per month), a musical discovery service for lean back listening – track on demand for lean forward listening – and caching on multiple devices for places where the internet is spotty. Add some social function around it – and you are in good shape. Pandora+ Rhapsody+ cahcing. Call it $5 per month – maybe $10 if you wanted mobile – I think that would be one hell of a service.