NEW YORK (AdAge.com) — Documents in Viacom’s three-year-old, $1 billion suit against YouTube, unsealed today by U.S. District Court Judge Louis Stanton, paint a fascinating picture of the intertwined relationship between the video site and the conglomerate that owns MTV, BET and Comedy Central.
For example: YouTube co-founders Chad Hurley, Steve Chen and Jawed Karim were in a race early on to build traffic at the site in hopes of getting acquired, and knew full well that illegally uploaded TV clips might help.
“It’s all ’bout da videos, yo. We’ll be an excellent acquisition target once we’re huge,” Mr. Karim wrote in a 2005 e-mail to Mr. Chen and Mr. Hurley.
But they also knew about the dangers. As Mr. Chen wrote to Mr. Karim: “Jawed, please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for copyrighted material on the site … when one of the founders is blatantly stealing content from other sites.”
At the same time, YouTube claims that Viacom hired no fewer than 18 promotion companies to seed videos on YouTube under different user names and e-mail addresses, including some that were “roughed up” to look as if they’d been leaked and uploaded at Kinko’s so they would be more difficult to trace.
As one Viacom exec, uploading videos to the site in 2006, wrote, “I am uploading YouTube videos under the fake grassroots account ‘demansr’ — am having a phone conversation with YouTube people on Wednesday as they are already questioning my identity. Bastards.”
Indeed, as early as 2006, a Paramount executive recommended YouTube as a site to post “behind-the-scenes footage or content from the cutting-room floor so users feel they have found something unique rather than a traditional trailer.”
Evidence like this forms a big part of YouTube’s defence. As chief counsel Zahavah Levine wrote in a blog post, “For years, Viacom continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there.”
Ms. Levine also argues that YouTube and sites like it “will cease to exist in their current form if Viacom and others have their way in their lawsuits against YouTube.”
YouTube ‘built on infringement’
Viacom, on the other hand, argues that “YouTube was intentionally built on infringement and there are countless internal YouTube communications demonstrating that YouTube’s founders and its employees intended to profit from that infringement.”
The bizarre aspect of this case is that both YouTube and Viacom generally work happily together today, and Viacom has no problem with the way YouTube identifies copyrighted content; the site either takes it down or allows owners to sell advertising against it. This case is about the early days of YouTube, before it had robust copyright protections put into place and when, Viacom execs allege, the co-founders actively encouraged uploads of “Daily Show” and “South Park” clips and then were slow to take them down.
Both parties are asking Judge Stanton for a summary judgment in the case, meaning a ruling on the facts presented and no trial. Judge Stanton is likely to make that ruling within a few months; if he rules against, then a trial would begin, as would likely settlement talks.
One thing is clear from the documents: Viacom recognised the power of YouTube early on and not only tried to leverage the platform to promote their shows and Paramount films, but also studied whether to buy YouTube itself.
In 2006, shortly before Google’s $1.65 billion purchase of the video site, a proposal e-mailed by former MTV exec Adam Cahan, now CEO of video-ad serving firm Auditude, said it would “make a transformative acquisition for MTV Networks/Viacom that would immediately make us the leading deliverer of video online, globally.”
In the end, YouTube’s co-founders’ strategy paid off, handsomely. Mr. Hurley received Google shares worth $334 million when the deal closed in 2006; Mr. Chen received $301 million and Mr. Karim, $66 million. Sequoia Capital, YouTube’s largest venture capital investor which provided $9 million in funding, exited to the tune of $516 million in Google shares.
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