Google Vs. Viacom

The Google vs. Viacom legal battle is rapidly approaching its crescendo, with both sides likely to meet in court and tell their own side of the story regarding the copyright infringements that formed a big part of the site’s early days.

As part of the recently-revealed legal documents, confidential profit and loss information was uncovered. Which NewTeeVee has used to build a picture of how YouTube was financed before Google took the site over in October 2006.

BG – Before Google

YouTube’s co-founders – Steve Chen, Chad Hurley, and Jawed Karim – purchased the YouTube domain in February 2005. Between then and August 2006, when acquirers started being sought, they spent $11.5 million on the site.

$8 million of that total went on infrastructure, with hosting costs hitting $1 million a month between June 2006 and August 2006. The other $3.5 million was spent on paying and training employees, and on travel and costs as the founders pimped their site out to potential purchasers.

The first revenue came in December 2005, but it was a paltry $15,000. In total, YouTube pulled in around $5 million in revenue in its first 18 months, with revenues in the ‘Before Google’ period peaking at $2.5 million in August 2006.

AG – After Google

Before Google came in and bought the site for $1.65 billion in October 2006, YouTube had existed on two rounds of funding totaling around $11.5 million. Which seems meager now considering the price Google ended up paying.

YouTube was on the verge of profitability when Google took over, but the search giant decided to focus on building its user base at the expense of profit for at least a year. Google CEO Eric Schmidt wanted “to grow playbacks to 1b/day [one billion per day].” A target that was finally reached in October 2009, three years after Google’s costly acquisition.

Now, and since early 2008, Google is desperately trying to turn YouTube into a profitable part of its business. Premium content is being added to the site all the time, and adverts, and different types of adverts are steadily increasing. Although a profit is still not guaranteed.

Conclusions

I wonder how long YouTube would have survived had Google not acquired the site when it did. Sure, it was about to turn a profit, but the running costs of managing the user base could easily have outstripped revenue as time went on.

The online video world would unarguably be a vastly different place without YouTube. For better or worse.

A Brief History Lesson

Viacom Vs Google can be traced right back to May 2005 before YouTube was under the protective wing of Google. A clip from Paramount Pictures’ Twin Towers was uploaded to the site, and Viacom demanded to know who the uploader was.

In October 2006 YouTube made a deal with Viacom to syndicate content. Then Google bought YouTube for $1.65 billion. February 2007 saw Viacom retract the previous deal and pull everything off the site.

March 2007 saw Viacom sue Google for 63,000 counts of copyright infringement, for which it was seeking $1 billion in damages. Google argues that YouTube is protected under the Safe Harbor provision of the Digital Millennium Copyright Act.

BetaNews has the full timeline with many more twists and turns. But it all builds to this point when Google and Viacom’s documents pertaining to the court case have been released. And they make for interesting reading, to say the least.

Google’s Claims

Google claims that Viacom wanted it both ways, continuously uploading its content to YouTube while publicly rallying against it. Google claims Viacom uploaded roughed up versions of videos so they looked stolen, hiring marketing agencies to do the dirty work.

Google claims that Viacom even uploaded many of the clips which it is now suing over. And maintains that it is protected by the Digital Millennium Copyright Act as it removes videos suspected of infringing copyrights.

Google also makes the claim that Viacom was interested in acquiring YouTube at one point.

Viacom’s Claims

Viacom dismisses the DMCA defense as it insists YouTube is more than just a passive content host and is therefore responsible for what videos were being uploaded to the site.

What’s more, Viacom also accuses YouTube’s founders of at the very least turning a blind eye to copyright infringing clips, suggesting that traffic was sought by any means necessary in order to ensure a quick sale. Viacom also claims Jawed Karim (YouTube co-founder) himself uploaded infringing videos, using email correspondence between the founders as evidence.

In essence, Viacom argues that YouTube was “intentionally built on infringement,” and deserves no leniency in court despite the measures put in place to clean up the site since the lawsuit was issued.

Conclusions

The documents feel very much like each side is attempting to score points from the other. And it’s almost inevitable that the case will now end up in court.

The sides have until April 30 to file opposing arguments to each other’s motions, with a trial then set to take place later this year. And it’ll be a trial whose verdict could set a landmark in terms of copyright owners vs. online video sites.

Google

Google is, without a shadow of a doubt, the biggest name on the Internet right now. The search giant controls the search sector, is making gains with its Chrome Web browser, has Maps, Street View, and all those other cool apps, and, of course, owns YouTube.

Google has also made the move to smartphones with its Android operating system. But it’s yet to venture into the living room, at least until now.

Google Living Room

There have been rumors of Google attempting to enter the living room by way of a set-top box for a while now, but nothing was really known about the efforts, and whether they would actually amount to anything.

But the New York Times is now reporting that Google TV is its name, it’s very real, and Google already has partners lined up.

Google TV

Google, Intel, and Sony are alleged to be jointly developing the Google TV platform. Google TV would take the form of both hardware (set-top boxes) and software (built into TVs) and bring Google right into the living room.

Google TV would be based on the Android operating system and be open to software developers. The intention being to create a similar buzz and number of applications as experienced by the Apple App Store and other smartphone app platforms.

Google TV would allow users to browse and search the Web, watch online video via Web-based apps including YouTube and Hulu (although Boxee’s efforts to do the same thing have been shuttered), and play downloadable games.

Google isn’t doing this for nothing: it would allow the tech giant to place ads on the system and put it at the forefront of the move to connected TV platforms, of which there are an increasing number.

Conclusions

Google has enough clout to not only make this happen but to sweep away all the other connected TV platforms already out there or emerging from development. But it cannot afford any mistakes on this score, and there’s still no real evidence that people want these platforms in any great number.

More details, and an official announcement from Google and/or its partners are definitely needed before I’ll be getting too excited.

YouTube Mobile

YouTube’s mobile site is a version of the online video leader built especially for mobile phone users. It isn’t the same as the specially-created YouTube interfaces on iPhone and Android, although users of these two platforms can visit the mobile site at m.youtube.com.

The YouTube mobile site is surprisingly popular, boasting “millions of people all over the world … streaming tens of millions of videos every day.” That isn’t even close to the main YouTube Web site, which now boasts over one billion videos viewed every day.

However, with growth quoted as “over 160% in 2009,” and that likely to rise even higher in 2010, Google is keen to wring every drop of revenue possible out of YouTube as it endeavors to make a profit from the site.

Mobile Advertising

Google today announced it was rolling out advertising on the YouTube mobile site. At least in the U.S. and Japan. The decision follows a trial last summer which was successful in terms of “click-throughs, user experience, and brand awareness.”

Banner ads will now appear on the Home, Search, and Browse pages, but none will yet appear on the actual videos.

Google has been filling the full-fledged YouTube Web site with ads, including overlays and pre-rolls on the videos themselves. But the lack of Flash on handsets and the range of different standards throughout the industry means they aren’t yet available on the mobile site. Google is planning to introduce overlay and pre-rolls in the future though.

Conclusions

With big name advertisers including Sony, Kia, Land Rover, and L’Oreal having already bitten the YouTube mobile advertising bullet, the future looks positive. It seems most advertisers will now want to be present on the mobile site as well as the main Web site.

Which can only aid Google’s effort to turn YouTube from being the online video standard to the ‘profitable’ online video standard. How close it is to managing that is open to interpretation.

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Online Video Viewing Figures

Online video viewing figures are generally on the up. To a vast degree. As more and more people start turning to the Web for new ways of watching movies and television content, the big players are generally picking up new viewers left, right, and center.

But it isn’t exactly plain sailing, especially for everyone other than YouTube who is currently fighting to maintain or steal second place behind the Google-owned site.

January 2010 ComScore

ComScore today revealed the online video rankings for January 2010. After declaring after the December figures were released that online video is “showing no signs of slowing down in growth,” the inevitable happened: a slowing down in growth.

Overall viewing figures dropped by around 2.5 percent, from 33.2 billion views in December 2009 to 32.4 billion views January 2010. Unique viewers also dropped, from 177.9 million to 173.4 million.

YouTube, listed as Google Sites, is still number one, and by a huge margin. The site accounted for 39.5 percent of the total views in January 2010, although that was down on its total for December 2009.

Hulu & Vevo Suffer

Hulu’s sweet victory last month was only short-lived. While it hit one billion video views in December for the first time in its history, that figure dropped back massively to 903 million in January. The obvious explanation is a lack of must-see episodes as shows such as Glee take mid-season hiatuses. And the loss of The Daily Show and The Colbert Report won’t help Hulu recover in the future.

Vevo actually gained video views in January, rising from 28.1 million in December to 32.4 million. However, as the site didn’t launch until December 9, this actually constitutes a drop in real terms. And that’s despite comScore including YouTube music videos in Vevo’s numbers.

Conclusions

Is this merely a short-term glitch or a sign that the growth of online video has suddenly and inexplicably hit its peak? The fact is that the same sites are dominating and until a new venture rises up the charts a certain amount of leveling off should be expected.

Google’s YouTube

Google acquired YouTube for a whopping $1.65 billion in October 2006, just 18 months after the domain name was registered. Google CEO Eric Schmidt has since stated he thinks the company paid way over the odds for the startup, but that it was a necessary purchase.

What Google got was a YouTube that’s very different than the one we see today. Piracy was still rife, with unauthorized clips all over the site. Although these were eventually removed it took a lot longer than it does these days.

YouTube Revenue

YouTube has likely never made money for Google, at least if analysts’ previous attempts to estimate the incomings and outgoings of the company are to be believed.

However, according to MediaMemo, Citigroup’s Mark Mahaney has a different view. He estimates that YouTube made around $727 million in revenue in 2009, will make $945 million in 2010, and $1.1 billion in 2011.

He doesn’t mention the expenses YouTube carries with it, which are likely to be vast. However, with those sorts of revenues there’s a strong chance that YouTube is either already turning, or about to turn, a profit for Google.

Mahaney’s methodology was simple: transpose MySpace’s revenue-to-page view ratio with YouTube’s. Which is hardly scientific but is as good a method as any with Google continuing to keep official figures confidential.

Google Vs. Viacom

Today has also brought new news in the continuing legal battle between Google and Viacom. The latter sued the former for $1 billion in damages way back in 2007, alleging “massive intentional copyright infringement.”

Viacom’s complaint is that Google profited from the 160,000 unauthorized clips on the site before new methods were introduced to combat uploading of pirated video clips.

According to CNET, both sides are filing motions for summary judgment. In essence, this means that the talking is over with both sides now confident enough to put their case forward. It’s now up to the judge to decide the next course of action but the case is likely to come to a head very soon.

YouTube Redesign

YouTube began testing its new redesign as part of TestTube, YouTube’s ideas incubator, last December. And while not all of the features and changes of Feather made it through to the final redesign, most have.

The redesign proper began in January, with all extraneous and unnecessary elements removed in favor of a more minimalist look and feel. Those first changes of a month ago were mostly aesthetic, but the newly-unveiled changes are a little more nuts-and-bolts.

Playlists Galore

Playlists have been given a makeover, with a new interface making the whole idea more seamless and a more integral part of YouTube as a whole.

There is, thankfully, an option to turn AutoPlay on or off, but the default is to have one video queued up and ready to play as soon as the one you’ve chosen to watch ends. This could increase the number of videos each user watches on YouTube considerably.

Video Queuing

The queuing of videos is now possible within search results. So when you search for a topic from the video page, you’ll now be able to select the video which will follow the one currently playing.

This should mesh well with the new playlist options to keep people on the site and watching videos for longer periods. But it’s a feature which has been on most Web-based music players for a long time, so Google is really just catching up.

Integrated Video Comments

Lastly, the comments section will now include text and video responses as standard. The text comments on YouTube are where arguments and insults occur on a daily basis, although that does mean they’re never dull.

The inclusion of video comments as an integrated feature should break up the conversation in a good way.

Conclusions

The YouTube redesign is still very much a work in progress, and I’m sure some features will prove more popular than others. All in all though, they’re so far improving YouTube in a big way. And I hope there is a lot more to come.

Rickrolling Phenomenon

Any regular Web user will no doubt be aware of the phenomenon that is Rickrolling. In fact, everyone has probably been Rickrolled on more than one occasion.

Rickrolling began on the 4Chan message board back in 2007 but soon spread to the rest of the Web. In essence, you post a link to something you describe as interesting, cool, or must-see, when in fact the link leads to the music video for Never Gonna Give You Up, a Rick Astley track that sums up 1980s cheese in one three-minute package.

Rickrolling became so big that Google used it as one of its April Fool’s Day pranks in 2008, linking all the featured videos on YouTube’s front page to the Rickroll video. And then Rick Astley himself turned up during the Macy’s Thanksgiving Day Parade in November of that year lip-syncing the lyrics to the millions of people watching at home.

Although according to Pete Waterman, the song still didn’t make a fortune, despite its new-found fame.

Original Video Removed

As first noticed by Neowin, the original Rickroll video, which has been up since May 2007, disappeared on Wednesday morning, with a “This video has been removed due to terms of use violation” message displayed instead.

A collective gasp then went round the blogosphere and social networking sites as people reacted to the news. Could the art of Rickrolling really have been killed off? And why, after nearly three years on the site, had the video now been pulled?

Original Video Restored

It was a mistake, pure and simple, with YouTube spokesperson issuing the following statement while restoring the video to its former glory.

“With 20 hours of video uploaded every minute to YouTube, we count on our community members to know our Community Guidelines and to flag content they believe violates them. We review all flagged content quickly, and if we find that a video does violate the guidelines, we remove it, on average in under an hour. We also have a team that is dedicated to identifying and removing spam from YouTube.”

“Occasionally, an account flagged by users or identified by our spam team is mistakenly taken down. When this is brought to our attention, we move quickly to take appropriate action, including restoring videos that had been mistakenly removed and channels that have been mistakenly suspended.”

Conclusions

After the absurd decision by Italy to convict three Google executives over a UGC video which had nothing to do with them, maybe YouTube is being a little overcautious and overzealous in its take-downs at the moment.

Whether that’s the case or not, I’m glad the Rickroll video is back. It’s one of those Web phenomenons that is sure to fall in and out of favor but never truly disappear. Unless YouTube removes it again, and for good next time.

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Google Video Upload

In 2006, before Google acquired YouTube, a short video appeared on the now-defunct Google Video showing a disabled teenager being bullied by a group of his peers. One of the teenagers had uploaded the video, which remained on the site for a couple of months until complaints were received.

At that point, Google removed the video as fast as it could, and helped the Italian police track down the people responsible. The female uploader and several of her classmates were sentenced to 10 months community service.

That surely should have been the end of this sorry story, but it wasn’t.

Google Execs Charged

In July 2008, four Google executives were charged with criminal defamation and a failure to comply with the Italian privacy code. All over a video that had nothing whatsoever to do with any of them. They merely worked for the company which hosted the video online.

Italian prosecutors then spent more than a year building a case against the quartet before the trial began in October 2009, with reports in November suggesting that jail time was being sought.

Google Execs Convicted

The verdict was announced this morning, and while all four of the men on trial were absolved of the defamation claim, three were convicted of bypassing Italian privacy laws.

The three convicted men, David Drummond, Peter Fleischer, and George Reyes have each received a suspended six-month sentence.

Google has responded to this verdict and sentencing in a vitriolic blog post, stating:

“In essence this ruling means that employees of hosting platforms like Google Video are criminally responsible for content that users upload.”

“It attacks the very principles of freedom on which the Internet is built. Common sense dictates that only the person who films and uploads a video to a hosting platform could take the steps necessary to protect the privacy and obtain the consent of the people they are filming.”

And I have to agree. This verdict is complete nonsense and would appear to go against established European Union laws which state that companies hosting content have a safe harbor so long as content found to be illegal is removed upon request. Which it clearly was in this case.

The Future For YouTube?

This verdict, if upheld on appeal, could be very serious for Google, YouTube, and all content-hosting companies in Italy, Europe, and beyond. As it implies they are responsible for the content being uploaded at all time, no matter what action is taken after the event.

For YouTube specifically, this kind of case could only be prevented in the future by all UGC videos being moderated before they appear on the site. Which, with 20 hours of video uploaded every minute worldwide, would be a near-impossible task.

YouTube Video Rentals

YouTube signaled its intent to start charging for some videos last September, with rumors of a movie rental service priced at $3.99-a-film emerging.

The trail then went cold until January of this year when YouTube officially released the first five offerings under the new service. Until then, the service had merely been trialled by Google employees.

Sundance Film Festival Trial

The first offerings were The Cove, Bass Ackwards, One Too Many Mornings, Homewrecker, and Children of Invention, all independent films from the 2010 Sundance Film Festival which would otherwise have struggled to find an audience.

The trial ended when the festival did, and the total revenue brought in by the trial was $10,709.16. This isn’t a huge amount of money, especially for a site as popular as YouTube or a company as big as Google.

But it was a good enough start to justify an expansion of the service, proving that should the right content, and a fair amount of it, be made available that it could prove to be another way of bringing in revenue to YouTube. Which, lest we forget, has yet to turn a profit.

Expanding The Library

NewTeeVee now reports that YouTube has expanded the service to include more videos, more content providers, and a greater variation of genres. Rather than just independent filmmakers, genres such as sport, travel, cooking, and education are now also available.

Not that YouTube is publicizing the service yet. In fact, it’s all being rolled out very quietly and with no fanfare. Then again, the video rentals service is still in beta, and will likely be for some time to come.

Conclusions

YouTube obviously has high hopes that there’s a profitable future in offering video rentals, and not just in the form of movies. And I don’t doubt this is the case.

Although most people will still only use YouTube for the free UGC that is at its core, there is a significant proportion of people happy and willing to pay for content, if that content is what they’re seeking.

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