Mark Cuban has posted a brilliant article which he received from one of his well trusted unnamed business friends about the Google-YouTube aquisition. What the article states, although not confirmed as fact, is very shocking.
It looks like Google, YouTube and the content owners have been making some very sneaky agreements. Here is a summary:
- Of the $1.6 billion Google is paying for YouTube, $500 million is being kept in Escrow to deal with copyright lawsuits. Google intends to have out of court settlements wherever possible.
- Vivendi's Universal Music Group, Sony and Bertelsmann's jointly owned Sony BMG Music Entertainment and the Warner Music Group each quietly took a small stake in YouTube worth $50 million dollars, apparently paid for by the $500 million copyright fund.
- These companies were paid off so that they would not attempt to sue YouTube over copyright infringement for a given amount of time (estimated to be six months). This gives YouTube some breathing space and allows it to continue to grow on copyrighted content.
- Google also encouraged these content owners to sue other video sharing sites (Bolt and Grouper sued by Universal) to thwart their growth and make investors uneasy about backing video sharing sites. This goes on while YouTube continues to use copyright content to grow its user base.
- The $50 million was paid to the content owners in equity which allows them to avoid paying any royalties to the actual content producers. This is because it appears as an investment, rather than a payment to use content, therefore content producers don't get a dime.
However, this is only a short term solution and how long Google and YouTube can keep this up can't last more than a year.
It will be interesting to see what clever deals Google and YouTube have up their sleeves for the long term to keep YouTube at the top and the copyright lawsuits at bay.
1. 1. YouTube - Copyrighted content = TiedTubes.
2. I don't care how they financed it, this is clearly an anti-trust case, if the DoJ doesn't pass around billion-dollar penalties and handcuffs, then I don't really need any more proof that the people in the DoJ these days are all on the take.
Posted at 12:10PM on Oct 31st 2006 by L'Emmerdeur