Viacom Sues Google -- Now What?

Everyone knows the what, and few people are surprised, although the amount does make one giggle in shock -- but what does this mean?

The core legal issue here is the "Safe Harbor" provision of the Digital Rights Management Act, which indemnifies online service providers when their users infringe copyright law by storing protected materials on their servers. The idea is that there's not much a provider can do to stop the individual, so only the individual is liable, not the provider.

What Viacom maintains is that, in this case, YouTube is profiting from the infringing materials, so Safe Harbor doesn't apply to them. Viacom has demanded that YouTube remove some 100,000 pieces of copyrighted materials from their servers, but YouTube is just not moving fast enough in bringing them down, nor are they proactively preventing users from uploading new material.

YouTube responds that they do not allow advertising on user video pages, in order to comply with the spirit of Safe Harbor (that is, not profit directly), although one could easily maintain that existentially, YouTube profits when the system is widely known to allow protected material. In practical terms, that means that if I remember a great "Family Guy" bit and want to see it replayed, I know I can get it on YouTube -- and as of today, that's still true. (Careful when clicking on this link -- this clip could be construed as very disturbing for some people.)

OK, so now what the technical issue is and what it means, but what does this lawsuit really mean? On the one hand it's hard for Google to control their users. If their users infringe, they're gonna infringe, so what can they do? That's not a good argument, says Viacom -- it's your service, you're making money off these videos, so we want our cut, and if you can't pay us, then take them off -- and it's up to you to figure out how.

Google is reported to be working on a search function to identify protected content on both Google Video and YouTube, but they're not there yet. So what can they do in the meantime? Go to signup-only model so they can control users better? That could cut down their reach significantly. Review every video that users upload? That would create a backlog months long, on the optimistic side.

When you get right down to it -- meaning using your "follow the money" instincts -- this must have something to do with the failed negotiations between the two parties to allow YouTube to carry Viacom clips. Google apparently wasn't going to pay Viacom to their satisfaction, so Viacom might very be using this lawsuit as a negotiating tool. Pay us now, Google -- or you'll pay us later. But either way, you're going to pay us. (Wow, maybe the "Family Guy" clip is a propos, after all!)

I predict the lawsuit does not proceed to fruition. It can't -- YouTube risks sinking an entire online marketing channel if they fight and lose. Google will settle, and it'll cost them.

The End of Web Radio As We Know It?

This story is so big that even the mainstream media sources are talking about it, but I will link to the first source in which I saw this story online, this Business week article.

The technical issue here is payment on a per listener/per song basis versus the traditional percent of revenue basis. Since web radio generates hardly any revenue to start with, there's no way they can withstand hefty fee increase the Copyright Royalty Board is demanding through their mandating the former, to take effect within the next two months.

The real issue, as I see it, is the music industry regaining some measure of control over their product, even if it's only symbolic. They're mightily pissed at the MP3/piracy phenomenon, which has reduced their sales at the local Tower Records (that is, if it's still open) and through Amazon.com. Heck, the unchecked growth of the MP3 single-handed even killed off a burgeoning online sales channel characterized by once-known entities CDNow and CDUniverse, which can now be only found strewn among ancient Mayan ruins somewhere in Mexico, I think. (Actually, I see a site called CDUniverse is actually still selling CDs online. Do you buy your CDs there? No? See what I mean?)

So, killing off several thousands basement web radio stations that weren't generating any money for them anyway is a cheap way to make a point to music distributors everywhere: don't eff-you-see-kay with the RIAA.

I doubt anyone is quaking in their boots as a result.

Answer: Enough Data To Make Your Freaking Brain Explode!

Question: How much data storage exists on the planet?

According to this article in eMarketer, a study by IDC reveals that there are 246 exabytes of total storage on the planet.

An exabyte equals 1,152,921,504,606,846,976 bytes, and there are 246 of those, which I'm sure is really meaningful to you. So how about this: if the average iPod is 40 gigs, then from that much storage you could create over 6.6 billion iPods, more than one for every person on the planet. Yeah, I know, you probably got three of them -- that'll cover for the guy in Vanuatu and the teenager on the Faroe Islands that don't have one.

And because I knew you were gonna ask -- an exabyte is 1,000 petabytes, a petabyte a 1,000 terabytes, and a terabyte is 1,000 gigabytes -- so that means an exabyte equals a jillion zillion gigabytes.

But that's not the best part. The best part is that the story goes on to say that more data is going to be generated just this year -- 255 exabytes -- than there even is storage available. If that doesn't make your head explode thinking about it, then you have a hell of a head.

So the next time your no account CTO tells you "storage is expensive" as an excuse to not keep log files for your site -- yes, that's what one actually told me less than a year ago, in front of the CEO -- that's when you know it's time to quit.

Mark Your Calendars for March 31, 2008

That's when you should at least be starting to think about buying stock in companies that manufacture television sets and digital converter boxes. That's because, according to this story in eMarketer, people are waiting until the very last minute to convert from analog sets to digital sets. Analogs will become absolutely useless as braodcasters switch to 100% digital signals a couple of springs from now.

I'm all set with my TV itself, although my portfolio might need a little sprucing up before then.

VCs Are Like the Mob

At least in Silicon Valley. This blog post on the Business 2.0 site says it's not about getting funded in order to survive -- it's about connections and introductions, and protection from competition and the big bad established online companies.

The cost? Well, just wait until you hit the big time. Then you'll pay the cost.

Broadband's Commentary on Net Neutrality

Read with interest this commentary (free registration required) by Scott Cleland, who heads up an organization called NetCompetition.org, in which he characterizes the battle of net neutrality as being between the "online giants" like Google, Yahoo, Ebay, Amazon, and IAC that want net neutrality regulation of broadband companies, and the broadband companies like Time Warner, Verizon, AT&T, Sprint, and Comcast, who "obviously don't want to be regulated".

Cleland provides three "bottom-line" reasons why advertisers should oppose net neutrality -- quoted from the article:

1. The companies that advertise very little want to regulate some of the advertising sector's best corporate clients.
   
2. Net neutrality will only strengthen the online giants' ability to dis-intermediate advertisers from their corporate clients.
   
3. Net neutrality would effectively outlaw broadband from evolving into a two-sided market paid for by both consumer subscriptions AND advertising revenues--the way newspapers, magazines and cable currently operate.
   

It's no accident that Cleland is himself self-interested -- NetCompetition.org is described as being funded by the broadband companies themselves.

Missing in this debate, as you might expect, is the potential of broadband companies using their stewardship of this public utility to grant unto itself exclusive content and platform rights, thus squeezing out content players small and large from having a platform on which offer their wares to the public. Without net neutrality, we might not see any more Youtubes sprouting up in the future, which of course would serve the major broadband companies just fine. But the overarching industry problem might also be the stifling of innovation as small players get locked out of the opportunity for distribution, while the pipe-cum-content owners rest on their laurels and maximize profits to increase bonuses for executives rather than plowing them into new content and technological innovations that would improve the Internet experience for users.

The 10/20/30 Rule of PowerPoint

This blog post from Guy Kawasaki, a VC/author/serial adviser-and-board-member, is one of the best pieces of productivity advice I've seen in a long time.

We've all sat through long boring PowerPoint presentations, and for Guy it's endemic to his VC job because he has to listen to funding pitches all day. So he has developed (or at least is evangelizing) the 10/20/30 rule for PPT presentations:

- 10 slides max
- 20 minutes max
- 30 point font at minimum

Guy maintains that ten concepts is the most any human can comprehend at a time, and 20 minutes is a good goal because the average presenter will spend the other 40 minutes setting up the laptop to work with the projector.

The 30-point part is especially amusing, as well as salient. Guy theorizes that people who cram more words onto a PPT page don't really know the material and need more text as a crutch, thus forcing a smaller font to fit it all in. His alternate recommendation: determine the age of the oldest person in the room, and divide it by two -- that's your minimum font size.

This is one of those pieces of productivity advice I latch onto immediately and never forget.

Like Viacom, CBS Rebuffs Google/You Tube

According to this Mediapost story (free registration required), the negotiations between Google and CBS to extend the agreement to show CBS content on YouTube have ended. This happens not long after Viacom had broken off talks regarding a similar agreement.

Boy, wouldn't I like to be a fly on the wall of the corner offices at the media companies as they talk about YouTube. How much of the problem in reaching an agreement stems from CBS's and Viacom's being threatened by a new media upstart? After all, these companies have been around for decades (Viacom: 1971; CBS: 1927), and YouTube launched -- launched, mind you -- in February of 2005, a scant two years ago. If I were an old media company regarding such upstarts, both in terms of the threat they pose and in terms of the audacity of their very existence -- my nose might be a little out of joint, too.

Interesting comment by Larry Gerbrandt, general manager of Nielsen Analytics: "The problem with You Tube is there is no revenue yet ... How is Google going to see a return on the $1.65 billion they paid? They have yet to create a model. On the other hand, once they start to generate significant amounts of revenue, those copyright issues become more significant."

This all prompts a recall of Mark Cuban's famous email regarding the Google acquisition of YouTube in the first place, in which he wrote that anyone who would buy YouTube is a "moron". The delicious irony here, of course, is that Cuban himself cashed out on Broadcast.com to the tune of $5 billion. To see just how much Yahoo is benefiting from that deal, just type the URL www.broadcast.com into your browser and see where it takes you.