YouTube to purge itself of 100,000 Viacom clips

Video pieces were posted without permission

February 03, 2007|By Bloomberg News

NEW YORK -- YouTube, the video-sharing site owned by Google Inc., agreed yesterday to remove more than 100,000 clips produced by Viacom Inc. that were posted without permission.

Viacom asked to have the videos removed because YouTube was unwilling to reach a "fair market agreement" to compensate for using the content, Viacom said. Google said it would comply with the request.

The clash highlights the challenge YouTube faces from media companies that say the site is gaining popularity from content at their expense. Though YouTube promised to filter out unauthorized clips, it has yet to do so, Viacom said.

"Viacom is obviously unhappy about what Google has offered," said Greg Sterling, an analyst at Sterling Market Intelligence in Oakland, Calif. "This is an effort to ratchet up the pressure on Google."

Shares of Google fell 25 cents to close at $481.50, while Viacom's shares rose 71 cents to close at $41.08.

"It's unfortunate that Viacom will no longer be able to benefit from YouTube's passionate audience," YouTube said about removing the clips. "We take copyright issues very seriously."

Viacom, controlled by billionaire Sumner Redstone, owns the MTV, VH1, Comedy Central and Nickelodeon television networks, along with Paramount Pictures.

Compensating content owners for the material that appears on video sites such as YouTube and Google Video may push up Google's costs.

Google Chief Executive Officer Eric E. Schmidt said during an earnings conference call this week that he would continue to invest in advertising and Web content this year.

Google said when it bought YouTube in November that it set aside more than $200 million in stock from the $1.65 billion purchase price to protect against lawsuits.

`Pays up now'

"Bottom line, we think Google pays up now, in the early days," Benjamin A. Schachter, an analyst at UBS AG, wrote in note to investors yesterday.

"We think that it's an excellent use of capital, though it may pressure margins," Schachter said.

Under copyright law, YouTube is obliged to take down unauthorized clips within a "reasonable" period, said Helene M. Freeman, an intellectual property attorney at Dorsey & Whitney LLP in New York. Otherwise, YouTube can be liable for damages.

Content owners have asked for material to be removed from YouTube in the past. Last month, News Corp.'s Twentieth Century Fox Film Corp. obtained a court order to force YouTube to identify a subscriber whom Fox said posted pirated copies of its television shows such as 24 and The Simpsons.

Way to promote

Still, media companies see YouTube as a means to promote their content and reach young consumers, who are spending more of their time online.

YouTube last year brokered licensing agreements with music companies including Warner Music Group, Universal Music Group and Sony BMG Music Entertainment. The company also is showing news, sports and entertainment clips from CBS Corp.

"To some extent, it is vital marketing," Freeman said.

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