I first saw this posted on the Pho List. A media related list that I have participated in for years with lots of smart people with great insights. THe posting, as you will read is fascinating and was originally posted anonymously. I emailed the list asking for permission to post it on my blog. In response, the “anonymous author”, who I respect and trust.

I cant say this has been fact checked. It hasnt. I cant say its 100 pct accurate, I dont know. But it rings true, and as I said, I trust the source

> I’m an experienced veteran in the digital media business and thought
> I’d share my version of events that happened at Youtube. Some of this
> is based on talks with people involved and some is speculation based
> on my experience working in the industry, negotiating settlements and
> battling in court.
>
> In the months preceding the sale of YouTube the complaints from
> copyright owners began to mount at a ferocious pace. Small content
> owners and big were lodging official takedown notices only to see
> their works almost immediately reappear. These issues had to be
> disclosed to the suitors who were sniffing around like Google but
> Yahoo was deep in the process as well. (News Corp inquired but since
> Myspace knew they were a big source of Youtube’s traffic they quickly
> choked on the 9 digit price tag.) While the search giants had serious
> interest, the suitors kept stumbling over the potential enormous
> copyright infringement claims that were mounting.
>
> Youtube knew they had an issue and had offered a straight revenue
> share deal if the complainants would call off the dogs and give them
> time. The media companies quickly rejected this path for two reasons.
> First off Youtube wasn’t making any money and was fuzzy about how they
> would generate revenue in the future. But more important the media
> companies view is that there was a mountain of past infringement that
> Youtube had engaged in and built their business on and they felt they
> deserved some of this accumulated value. And who could blame them. In
> spite of the media “user generated” puff pieces it was clear to all
> involved that they generated that content by hooking up their TV tuner
> cards to their PCs.
>
> It didn’t take a team of Harvard trained investment bankers to come up
> with the obvious solution and that is to set aside a portion of the
> buyout offer to deal with copyright issues. It’s not uncommon in
> transactions to have holdbacks to deal with liabilities and Youtube
> knew they had a big one. So the parties (including venture capital
> firm Sequoia Capital) agreed to earmark a portion of the purchase
> price to pay for settlements and/or hire attorneys to fight claims.
> Nearly 500 million of the 1.65 billion purchase price is not being
> disbursed to shareholders but instead held in escrow.
>
> While this seemed good on paper Google attorneys were still
> uncomfortable with the enormous possible legal claims and speculated
> that maybe even 500 million may not be enough – remember were talking
> about hundreds of thousands of possible copyright infringements.
> Youtube attorneys emphasized the DMCA safe harbor provisions and
> pointed to the 3 full timers dedicated to dealing with takedown
> notices, but couldn’t get G comfortable. Google wasn’t worried about
> the small guys, but the big guys were a significant impediment to a
> sale. They could swing settlement numbers widely in one direction or
> another. So the decision was made to negotiate settlements with some
> of the largest music and film companies. If they could get to a good
> place with these companies they could get confidence from attorneys
> and the ever important “fairness opinion” from the bankers involved
> that this was a sane purchase.
>
> Armed with this kitty of money Youtube approached the media companies
> with an open checkbook to buy peace. The media companies smelled a
> transaction when Youtube radically changed their initial ‘revenue
> sharing’ offer to one laden with cash. But even they didn’t predict
> Google would pay such an exorbitant amount for Youtube so when Youtube
> started talking in multiples of tens of millions of dollars the media
> companies believed this to be fair and would lock in a nice Q3/Q4.
> [Note to self: Buy calls on media companies just prior to Q3/Q4
> earnings calls.] The major labels got wind that their counterparts
> were in heated discussions so they used a now common trick a “most
> favored nation” clause to assure that if if a comparable company
> negotiated a better deal that they would also receive that benefit.
> It’s a clever ploy to avoid anti-trust issues and gives them the
> benefit of securing the best negotiating company. They negotiated
> about 50 million for each major media company to be paid from the
> Google buyout monies.
>
> The media companies had their typical challenges. Specifically, how to
> get money from Youtube without being required to give any to the
> talent (musicians and actors)? If monies were received as part of a
> license to Youtube then they would contractually obligated to share a
> substantial portion of the proceeds with others. For example most
> record label contracts call for artists to get 50% of all license
> deals. It was decided the media companies would receive an equity
> position as an investor in Youtube which Google would buy from them.
> This shelters all the up front monies from any royalty demands by
> allowing them to classify it as gains from an investment position. A
> few savvy agents might complain about receiving nothing and get a
> token amount, but most will be unaware of what transpired.
>
> Since everyone was reaching into Google’s wallet, the big G wants to
> make sure the Youtube purchase was a wise one. Youtube’s value is
> predicated on it’s traffic and market leadership which Google needs to
> keep. If they simply agreed to remove all unauthorized content and
> saddle the user experience with ads Youtube would quickly be a
> skeleton of its prior self. Users would quickly move to competing
> sites. The media companies had 50 million reasons to want to help.
> Google needed a two pronged strategy which you see unfolding now.
>
> The first request was a simple one and that was an agreement to look
> the other way for the next 6 months or so while copyright infringement
> continues to flourish. This standstill is cloaked in language about
> building tools to help manage the content and track royalties, some of
> which is true but also G knows that every day they can operate in the
> shadows of copyright law is another day that Youtube can grow. It
> should be noted that Google video is a capable Youtube competitor with
> the ONE big difference being a much more sincere effort to not post
> unauthorized works – and Google fully appreciates what a difference
> that makes. So you can continue to find movie clips, tv show segments
> and just about every music video on Youtube today.
>
> The second request was to pile some lawsuits on competitors to slow
> them down and lock in Youtube’s position. As Google looked at it they
> bought a 6 month exclusive on widespread v
ideo copyright infringement.
> Universal obliged and sued two capable Youtube clones Bolt and
> Grouper. This has several effects. First, it puts enormous pressure on
> all the other video sites to clamp down on the laissez-faire content
> posting that is prevalent. If Google is agreeing to remove
> unauthorized content they want the rest of the industry doing the same
> thing. Secondly it shuts off the flow of venture capital investments
> into video firms. Without capital these firms can’t build the data
> centers and pay for the bandwidth required for these upside down
> businesses.
>
> There are some interesting chapters yet to unfold. One is how much of
> this will become public. Google is required by the SEC to disclose
> material financial developments at their company. Working in Google’s
> advantage is their enormous market capitalization and revenues will
> give them considerable leeway to claim that a 50 million transaction
> is not significant to their business. If the other video sites have
> the wherewithal to put up a legal fight any decent attorney will
> demand access to Youtube acquisition documents. Expect a claim of
> collusion between Google and the media companies as a defense
> strategy.
>
> Infringement lawsuits will be served on Youtube and the new proud
> parent Google in the coming months. Google will respond with two
> paths: an expensive legal fight or a quick and easy settlement with
> most choosing the latter. Are there any larger copyright holders such
> as music publishers, movie studios, or unlicensed record label EMI
> that put up a fight rather than accepting the check? We’ll have to
> watch and find out.
>

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Early this year the NBA came to me and asked if I would be interested in doing my own talk show on Sirius Radio. The NBA was in negotiations with Sirius at the time, and according to this NBA employee, Sirius would only do a deal with the NBA if I would do a show.

Doing a radio show is something I had been asked to do in the past, but it really wasnt something I had an interest in doing. I had zero interest in having a show of any kind. However, in the interest of helping the NBA close a multi million dollar deal, I told this person I would be happy to meet with Sirius. Thats what good partners do

I flew up to NY and met with Scott Greenstein of Sirius, who couldnt have been nicer, more encouraging , more complimentary and more excited about my doing a radio show. He actually got me excited about it. They would set up an ISDN link and board in my office so I could work from home. They would give me a producer so that in addition to the show time, my preperation time would only be a few more hours per week. We decided that I would do a show that would be every Sunday at noon for 3 hours. Not just during basketball season, but 46 weeks per year. My pay… nada. I could potentially earn a percentage of advertising revenue that I generated, but I wasnt planning on going out to sell ads.

I told them it sounded like fun, but I would ONLY do it if they closed a deal with the NBA. Scott made it clear that they wanted me to do the show whether or not the NBA deal closed. I made it clear that the only reason I would make this committment in time is to help the NBA and only with an NBA – Sirius deal could the show happen.

I had committed to give up my Sundays. Reschedule the Sunday half of my Daddy – Daughter lunchs at the infamous Blue Cow Restaurant eating chicking nuggets and hot fudge sundaes. Do the preperation time to make the show good. For Free. To be a good NBA partner.

Whenever Ive been able to help my NBA partners, I’ve always tried to. I have gone on sales calls with the NBA to try to close business. In one case where things didnt go so well with the Commissioner, I was brought in as an alternative. I have given talks , speechs and Q&A sessions with more than half the teams in the NBA. Whenever there is a Speakers Series held by a team , it seems like I am asked to speak. Teams refer me to other teams as being one of , if not the biggest draw they have had. In addition, if i get asked to speak by any group in an NBA city, I wont do it unless its before or after a game, and all the participants are required to buy a ticket to the game. Thats what good partners do.

Unfortunately my partners in the NBA didnt see the value I thought I brought to the league. Hey it happens. Im not the first business person who’s self evaluation of contribution to a business was wrong and I wont be the last. I have nothing but respect for my fellow NBA owners .. That said, I don’t feel the obligation to do what I thought was of value if others dont.

So, having made a short story long. To those of you who emailed, asking when RadioMaverick will start on Sirius, it won’t. For those of you who emailed asking if I will be speaking at your team’s functions again this year. I doubt it.

Will I still be cheering on the Mavs. Absolutely. Will I be in the same seats, cheering the same way. Absolutely. Not having to do the show is great news. Not doing the show and events is easy. Explaining to my daughter why we arent going to Purple Cow as she is trying to pull me out of my office every Sunday, now that would be hard.

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Chris Anderson did a masterful job of identifying and defining The Long Tail back in 2004 in a Wired Article. What i havent seen yet is a definition of when content crosses over from being part of the long tail, and onto the Vert Ramp (The perfect term to steal from skateboarding).

I think trying to define where the Long Tail ends and the Vert Ramp begins is critical, because the fact of the matter is: No Content Creator wants to be on the Long Tail. Anyone who has ever created content realizes that there is a very thick bar a bit above the the base of the Vert Ramp that acts as a content ceiling (thanks to Oliver Luckett for the term). that they are desperately trying to break through in order to get off the long tail and on to the Vert Ramp.

The illustration reflects my horrendous paint skills, but illustrates the point.

The concept of the content ceiling recognizes that there is a hierarchy that each content creator tries to work their way up.

First content providers, whether podcasters, vloggers, bloggers, movie makers, writers, poets, whatever the content type make the decision of the creation of the content is about love or money. Is the goal of the finished product commercial, or purely personal ?

If the goal is commercial, whether to make money directly or indirectly from the content, then the battle to fight through the Content Ceiling begins.

The bottom line is that people want to get paid for their work. Creators have a vision. They think there is something special about it, and they want to get rewarded for their effort. Its a simple goal in concept, but its incredibly difficult to achieve.

Very few commercial content creators aspire to get 10k aggregate views from all the videohosting sites. Very few bands are happy with having 10k free downloads , or even 10k friends on Myspace as their endgame. Very few commercial content creators aspire to see their creations end up on Community Access TV. All content creators recognize each of these as a way to create incremental demand for their content, in hopes of breaking through the Content Ceiling, but none of these will reward the content creator with direct revenue. For content creators trying to make a living from their work, they all just represent the Long Tail Ghetto.

The first step towards the Vert Ramp and up the hierarchy is to get paid. More and more sites like Revver are creating opportunities for video creators to make money, just as sites like WeedShare.com and CDBaby.com have been doing for music for years. The reality however are very, very few make minimum wage for their work.

If a content creator gets paid for their work, that by itself put them out of the longail of the longtail. Thats how difficult it is.

The next step up the hierachy comes from breaking out at least once. You got paid enough for your work to think you or your company have a chance to create content full time. It may be a one time reward, or just the first of many rewards. But as long as its just one so far, you are still in the long tail. Still underneath the content ceiling looking up at the Vert Ramp, but at least you lost your financial virginity.

Its for those that have gotten paid that the content ceiling really becomes an issue. At this point, the content creator has had a taste of some level of success and the pressure is on not only to recreate that success in some manner, but also to gain financially from it. Are you a 1 hit wonder, or a meal ticket ?

At this point, in order to fight through the content ceiling almost all content creators look to Big Money for help. Big Money is/are all the people and companies that control distribution and have big bank accounts. They are the people who can elevate the content creators from fearing their lights will be off when they get home, to buying a new house.

For all the talk of the internet changing distribution, the reality is that in order to break through the Content Ceiling and to climb the Vert Ramp, 99.9 pct of content creators are going to do need OPM (Other Peoples Money). The internet alone is not going to get the job done. You can put your content everywhere and anywhere the net allows you to be hosted, but for most people the amount of revenues for that content you had before you started the hosting process will be the exact same as what you have after the hosting process.

This is exactly why media celebrates when someone is discovered on Youtube, or when a contest winner is given a budget to produce a broadband show, or possibly even a TV show for a cable network. They broke out from poverty to primetime. This is exactly why they said yes to production deals and financing. They know that they cant break through the content ceiling without the help. Revver and its peers are working hard to change this, but its far from there.

Its not that signing a deal with a Big Money company guarantees that you will sell enough of your content to break onto the VertRamp. It certainly doesnt. There are plenty of failures with Big Money behind them. However, regardless of content type, if Big Money invests enough of their money and distribution, you chances of being on the VertRamp have increased exponentially.

If you do a deal with Big Money, AND your content sells enough to be on the Vert Ramp of content sales in your genre, you have broken through the content ceiling. The chances are very good that BigMoney will want to work with you again. They have made money from their investment in you. Success breeds success. They will probably come back to you and give you another shot to stay above the content ceiling and climb higher up the Vert Ramp

Once you as a creator have broken through the content ceiling and are on the Vert Ramp, the rules of the game get interesting. In fact, the success of your work, is far more dependeng on Big Money than it is on you. The further up the ramp (unless you reach the very top), the less influence you have in the success of your content. The competition on the Vert Ramp is cut throat. Big Money vs Big Money with enormous stakes. They dont want your help. They want to be Big Money and do what Big Money does. They try to make as much money as possible.

Every Big Money company wants everyone of their products to reach the very top of the Vert Ramp. To be #1 in sales, ratings, viewers, whatever their critical metric is. This is an important definition at this point in time. With all the discussion of the value of views and listens on the internet, it raises the question of just how valuable is a view or listen to a product/company with a product on the Vert Ramp.

The first distinction that needs to be made is a view/listen that Big Money creates versus one that a user creates for Big Money content. Big Money created views/listens are controlled to the liking of Big Money. You only see or hear what they want you to see or hear. So we dont have to identify value there. They do that internally before the content is posted.

User Created uploads of Big Money content , infringing content a user uploads content that belongs to someone else on to a hosting site for open consumption is a different story.

A lot of people feel that user uploads of infringing content is always a good thing. its new or incremental viewership. Its a new fan for a TV show. Its possibly a revenue share o
f advertising. All would seem to be positive. However they are not always positive.

A revenue share might seem great, until you realize that the videohost selling advertising around The Daily Show is competing with the Comedy Central sales force that is selling ads on the TV show, in the cable VOD, on the ComedyCentral.com website, on the mobile distribution of the show, etc, etc. It may also be competing for viewers, with the revenue per user from their website split being lower than what they earn for ads on the TV show itself.

This is a simple example. You can find examples of how it helps and how it hurts for any piece of infringing content. But the real question is; At what point does the copyright owner, usually Big Money, step in and say that they dont want their content being uploaded by users ? Here is a way to get an idea when.

I think there is a correlation between the Vert Ramp and the value of “views” on video hosting sites, or listens on illegal download sites. In fact they are inversions of each other.

Each company has an expectation of where their content will fall on the Vert Ramp. They have a point they consider failure. They have a point they consider break even. They have a point they consider good, not great. They have a point where its a success. Each is a higher and higher point up the Vert Ramp.

If we were to graph that point on the Vert Ramp, the higher up the Vert Ramp the performance is, the less value there is to views of infringing uploaded content . In addition, the higher up the Vert Ramp the performance is, the more likely BIg Money will go after the infringer or host to take down the infringing content. The reason is obvious. The more successful the content, the more confidence Big Money has in its ability to optimize the value of the content to their organization.

The more control Big Money wants over every aspect of the content. Infringing content creates risk to them that can negatively impact value (an exclusive interview on a super popular syndicated talk show that airs at different times around the country). Its not that they always will. Maybe Fox likes the idea of American Idol videos around the net. I dont know. But i do know that they likelihood that they will have questioned it is much higher than say from the producers of a tv show that is underperforming or at risk of cancellation. The more expectations of performance are achieved, the less value a view or listen online is.

On the flipside of course, the lower on the Vert Ramp, the more value of every listen or view. Big Money content that is not meeting expectations lets users do whatever they want with their content in hopes of increasing their metrics past the failure , then break even points. So it wont be unusual to see one company allow content from one show to slide under the radar in terms of copyright violation, while pumping out takedown notices for another show.

I think its an interesting discussion. What is the long tail. What happens when content gets off. What happens to the people who are on it. what is the impact of the internet. Is the only way out of the Internet Long Tail ghetto to work with Big Money ?

Time will tell.

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I asked the University of Texas at Arlington Physics department to take a look at both the new and old NBA basketballs. I asked them to compare the 2 and let me know what they thought. No preconceived notions. No prejudice. Just science.

Below is their data and response. Before you get to it, i wanted to give my conclusions.

1. Keep the ball. Its not perfect, but it would create more hassles than it solves to change.
2. Check every floor in the NBA for “dead spots” and make sure the floors are consistent. This ball will be more impacted by soft spots on the floor.
3. Rather than waiting to see how moisture impacts play and if it creates turnovers, recognize the properties and advantages of the ball, that it is the same regardless of how old or new, and change out the balls at halftime, at the end of quarters, or when it gets wet. Just like they do in baseball and football.
4. The balls retain dirt. Lots of it. By the end of a game or two, the nets look like there have geen kids throwing dirt at them. We need to find a way to keep the balls clean and let every team know so if a fan touches one after a game they dont get grossed out. Changing the balls can help alleviate this problem.
5. AFter this season, look at the embossing and layout on the ball and see if there is a better option. This will make the new ball bounce “true” when compared to the old ball.

Here is the report and a big THANK YOU to UTA and all the hard work they did. They are a first class program and did a wonderfully thorough job

October 26, 2006: MavBalls Investigation

Executive Summary:

Thus far, over the period October 14-present, through various tests, we have determined four major performance differences between the old leather balls and the new synthetic balls provided to us by the Dallas Mavericks organization. It should be noted that the leather balls provided were not new, but rather had been used for extended periods, whereas the synthetic balls provided were brand new.

(1) The two types of balls have different heights of return bounce when inflated to the same pressures and dropped from identical heights. The new synthetic balls display measurably reduced return height than the leather balls – about 5% less on average, when dropped from about four feet. Our compression measurements also indicate differences in elasticity. The difference in bounce heights may translate to effects on players’ reactions and handling in terms of dribbling, passing, rebounding off the backboard, bouncing off the rim, etc.

(2) The surface of the synthetic balls display a factor of two higher coefficient of static friction when both leather and synthetic balls are dry. This characteristic would make the synthetic balls easier to grip (stickier) than the leather balls, when dry.

(3) However, with a few drops of added moisture on the surface of each type of ball, the new synthetic balls have a coefficient of friction which is at least 30% smaller than similarly moistened leather balls. We have also measured the moisture absorption rate, which confirms that the synthetic ball absorbs moisture at a much slower rate, leaving more of the moisture on the surface. Therefore, when wet, the synthethic balls are much harder to grip and handle (slippery). By contrast, our measurements indicate that the grip of the leather ball improves after similar moistening.

(4) The synthetic balls bounce more erratically (i.e., at a wider range of angles) off floors. Preliminary measurements suggest about 30% greater deviation in the position of the synthetic ball after a bounce. More tests are scheduled to quantify this precisely.

All the above conclusions should be considered preliminary and subject to revision since we are still actively testing.

Details of Measurements:

(1) We have measured the size and weight of the two types of balls – they are essentially identical in these base characteristics (less than 1% difference). The conditioned leather balls and synthetic balls have similar patterns on the surface. However, prior to use/conditioning, the leather balls display a spherical appearance to the “pebbling” — instead of the flatter apperance seen in conditioned leather balls and synthetic balls.

(2) Tests have shown that the synthetic ball bounces back

lower by 5-8% when dropped from a height of little over four feet, depending on the hardness of the floor. Specifically, for a hard linoleum floor with concrete underneath, the leather ball bounced back an average distance of 2.2 inches higher compared to the synthetic ball, when dropped from a height of 4 feet 3.7 inches. The coefficient of restitution is 0.81 for the leather ball at this height, increasing monotonically to 0.85 for successive bounces till they reach approximately one third of the drop height. The coefficient of restitution for the synthetic ball was 0.79-0.84 over the same range of heights. The difference in bounce was more pronounced (increasing to 4 inches) on softer, more pliant floors.

(3) In order to compensate for the difference in bounce, we re-tested the basketballs by overinflating the synthetic balls. The synthetic ball had the same bounce characteristic as a conditioned leather ball when overinflated to 14 psi (the required overinfl
ation depends on the hardness of the floor). The leather ball was inflated to the recommended pressure of 8.5 psi for comparison.

(4) The bounce test was repeated with a new (unconditioned) leather ball. We found that the unconditioned leather ball had similar coefficient of restitution to the synthetic ball at same inflation — that is, both bounced back essentially to the same height. We conclude that the conditioning of leather balls increases their bounce. However, thus far, we have not attempted to condition our new leather ball and repeat the tests.

(5) The synthetic balls absorb water at a much slower rate, averaging 8.6 grams per minute. The conditioned leather balls will absorb water more rapidly, about 70 grams within a minute. After quasi-saturation at these water masses, the leather balls absorb water at a much slower rate than the synthetic balls, averaging 3.3 grams per minute.

(6) We have performed compression tests of all the balls. The data is being analyzed. Qualitatively, we find that the leather balls compress more easily under the same load, compared to the synthetic balls. The compression is linear over reasonable range of forces; we are in the process of quantitatively determining the elasticity.

(7) Initial friction tests show a much higher coefficient of friction for the synthetic ball when dry. The coefficient of friction between the surface of the synthetic ball and a silicon surface (medical literature shows silicon to have a friction coefficient similar to the human palm) is about 3.2, for our experimental setup. The friction coefficient is 1.69 for the leather ball, using the same procedure.

(8) Friction tests with liquids such as Visine (which has viscosity higher than water, similar to human tear drop, possibly closer to sweat) applied to the silicon (one drop per 2″x2″ area) show that the coefficient of friction increases for the leather ball. After repeated application of drops, the coefficient increased gradually by at least 30% for the leather ball, thereby making it more “gripable”. After quasi-saturation. adding drops reduced the coefficient by 20%, relative to a dry ball. However, for the synthetic ball, the coefficient of friction reduces immediately by 55% with the first drop of liquid. A larger reduction is seen with repeated application of liquid. In conclusion, the wet synthetic ball is significantly more slippery compared to wet leather balls.

(9) During our bounce tests, we observed that the synthetic ball bounced more erratically compared to the leather ball. Preliminary data shows an average horizontal deviation (near the apex after the bounce) of 15 mm for the leather ball, and 22 mm for the synthetic ball, after bouncing off the floor. Examination of the surface characteristics of the synthetic ball showed that more than 20% of the surface is embossed with text and logos to a depth of a few millimeters. We speculate that the more uneven surface of the strongly embossed synthetic balls is the principal cause for the erratic bounces in our tests. The surface of the leather ball is far more consistently spherical and even. We are continuing to improve these measurements.

Future tests:

(a) Continuing studies of friction to quantify the loss of

grip when the synthetic ball is wet.

(b) Wind tunnel test of aerodynamic drag is scheduled for

later this week.

(c) Futher quantitative measurement of erratic bounce is scheduled for next week.

(d) Repeat the bounce test (coefficient of restitution) at the American Airlines Center, if possible.

(e) All other tests are being repeated or redone with

increased precision.

Preliminary recommendations:

Based on our measurements so far, we would recommend that the embossing of the synthetic ball should be discontinued, to reduce erratic bounces. The material of the synthetic ball should be made more moisture absorbent, to increase friction and associated “gripability” when the surface is wet. The thickness of the rubber backing could be reduced to increase bounce. These relatively minor changes in manufacturing, it seems to us, would meet the dual needs of a more uniform low maintenance ball desired by the league with the performance characteristics approximating those which the players are accustomed to and prefer.

General comments about our measurements:

All tests were done with the balls inflated at 8 or 8.5 lbs. For comparisons shown above, old and new balls had the same inflation. Every measurement has been or will be repeated multiple times. We will include an estimate of errors in the next report. We used the following sample of balls for our studies: three conditioned leather balls provided by the

Dallas Mavericks, three new synthetic balls provided by the Dallas Mavericks, two new (not conditioned) official NBA leather balls purchased by us, and one new official NBA synthetic ball purchased by us. At this stage, please note that all measurements should be considered preliminary.

Kaushik De and Jim Horwitz

and the UT Arlington MavBalls Team

Department of Physics

The University of Texas at Arlington

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So rather than saying more about why Youtube/Gootube is living off of copyright infringement, I thought it would be an interesting excercise to try to answer How to Youtube Legally, and who, if anyone would be able to pull it off.

The answer lies not in who can pull off licensing deals with content providers, but who already has licenses in place with the content providers. Who is already paying them big bucks and can create a win win scenario for themselves and rightsholders.

The answer as it turns out is pretty simple, and not something “Netizens” will want to hear.

Comcast, Charter, TimeWarnerCable, Cox, Insight, MediaCom, Cablevision, basically any cable company , and outside the cable companies, the telcos that offer TV service, and finally the Satellite Companies, DirecTV and Dish Networks, all could pull off a legal version of Youtube.

These are the companies that are paying billions of dollars in aggregate to the cable networks already. The cable networks of course are paying the content owners who pay the downstream rightsholders. Whats more, they all already have in place licenses to promote the programming they are distributing within pre defined limits. So if Comcast or Dish Network wants to promote the Daily Show on Comedy Central in a commercial, or on their websites, they already have permission to do so with limited video rights.

In addition, most of the above already are Service Providers in the defined sense of the word. They offer broadband access to their customers on their own, or in partnership with others. The fact that they have broadband customers and pay content owners huge amounts of money gives them the opportunity to do any or both of the following.

1. Youtube Clone.
They all are working out deals with content providers to be able to stream or offer VOD/TV, it wouldnt take much at all to enhance their deals and ask for the ability to offer flash based video of user uploaded clips, with limitations in length and encoding quality. Limit the clips to say 5 minutes, with an option to the rightsholder to take down anything they dont want made available on the site. Tracking the length of a flash video is right there in the meta data, so their flash transcoder could easily shut off anything beyond 5 minutes. In addition to what users upload, they could of course upload their own content without limit to enhance the depth of offerings.

For music videos, they could get the same financial deal that Yahoo and other sites have with the labels for music videos. But, knowing that the labels want to have their own outlets on TV for their music, they have some leverage to work out a trade as an option.

In addition, each would have the option to enhance the benefits available to their own broadband subscribers. So Comcast for instance, could do their deal so that non Comcast subs would be limited to 100k encoding quality with the flash codec, but subscribers could have their content transcoded to 300k, and watch video with 10 minute limits, or whatever enhanced benefits they could negotiate with the content providers for their subs.

So basically, the big TV distributors could pretty easily work out deals with content rightsholders to be everything Youtube wants to be, but have the inside track to get it done quickly since they are already paying money to the rightsholder and this would be a simple extension.

if it makes sense for a video to be on Youtube for promotional value, wouldnt make more sense to be on the site of a partner that is paying you big money already ?

2. Safe Harbor Video Hosting Done Legally
Since everyone likes to pick on the telcos in net land, lets use them for this example. Lets say that Telco1 offers to its broadband subs the ability to host their own webpages, ala myspace or facebook. And lets say for the sake of example, they also offered exclusively to their subscribers the ability to upload up to 10Gigabytes in a single file or across as many files as they could fit.

In addition to the hosting, they would let you associate all kinds of metadata so you could more easily find it when you searched across your gigabytes worth of file(s). They would host the file in its original format and then once it was uploaded, they would give you a couple buttons for you to choose from. A button to post to your myspace page. A button to post to your Telco1 homepage. A button for your blog. HTML code for you to post it anywhere you want.

Basically, since its your video, they will allow you to put it anywhere you want, as long as its your website and under your control. If the original video format wasnt compatible with the website that you wanted to host the video, they would allow you to download a transcoding tool that converted it to the right format. Then you could reupload the files in the myspace or whoever format and keep the original, or take it down if it consumed too much of your storage capacity. This way, the Service Provider hasnt altered the files in anyway. The user has.

Then being the smart telco who reads this blog, they create Tubedexy. Tubedexy would be their own search engine specifically for finding videos and building community around those videos. It wouldnt look like Youtube, it would look more like how IceRocket.com shows videos it has indexed, with the groups, discussions, friends, users, etc added in. In other words, it wouldnt be promoting videos, it would only be linking to videos. Like a typical search engine.

Under this scenario, Telco1 would truly, no questions asked, qualify for the Safe Harbor Provisions of the DMCA.

They wouldnt have to do deals with anyone.

If they were hosting an infringing video on a users Telco1 Homepage and received a takedown notice, they would have to take it down. If the infringing video was hosted on other sites, Telco1 wouldnt care. The other sites would be hosting the infringing videos, so they would get the takedown notices. Telco1 would only really be bothered when an user was found to be repetitively infringing and uploading files indiscriminately. Then Telco1 would have to out the user to the rights holder after receiving a subpoena from the rightsholder. But thats something Gootube and all other sites will have to do as well, so thats not competitive negative

No fuss, no muss. It all would be 100 pct legal .

So maybe Rupert shouldnt sell DirecTV. It, along with all his Fox content could be great leverage to make myspace the last site standing when it comes to video. Or maybe the Telcos should go on a little buying spree to gain some webhosting and video expertise and gain a foothold in the social networking world.

Or maybe Google will just buy enough of the Telcos and cable companies to cover the country and offer broadband for free. Or set up free wireless everywhere, but require a credit card for “incidentals” to qualify as a service provider. Then they would be a service provider and could really legitimize Youtube with only minor changes, and of course own the world.

Maybe Starbucks would take that as a competitive move against their instore wireless.

Google vs Starbucks. Now thats a corporate deathmatch that could be interesting to see. Unless of course MicroSoft stepped into the frey to be the white knight to roll up all those that Google didnt want. Whats better than a corporate deathmatch ? A menage trois death match between google, microsoft and starbucks…

You want to play a game of global nuclear domination ?

Sorry for the tangent, i couldnt resist

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You register a domain name. Pay your money for the domain. Set it up to be hosted somewhere. Its your domain. You decide what is to go on the website. But are you the “Master of Your Domain” ?

As with Seinfeld, there is a contest going on right now in the videohosting world between the forces of temptation; In this case, the temptation of allowing others to post any and all content, copyrighted or not, on your domain, ala Youtube; and the forces of copyright law, taking complete control of your domain and only allowing content that has been reviewed and approved, ala Revver.com .

Put another way, Youtube puts up a notice to all of those who post to its domain….”Please dont do it. We are telling you not to do it. If someone catches you doing it, you will be embarassed and they will have the right to come after you. But, wink wink, we all can have a good time in the meantime. Flog away at copyright laws”.

Youtube lawyers are saying that as long as their users are ignoring copyright law, its not Youtube’s fault. Youtube lawyers do not feel that Youtube is the master of their own domain. But thats ok because the DMCA laws say that if you give up control of your own domain, you dont have to worry about copyright laws.

Revver on the other hand has chosen to be a master of its own domain. It will post no video it doesnt approve. It is a master of its own domain.

The importance of being the “Master of Your Domain” is soon to become not only a Seinfeld reference, but a legal one as well.

Youtube hides behind the DMCA Safe Harbor Laws, in particular this part:

(c) Information Residing on Systems or Networks At Direction of Users.- (1) In general.- A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider-

(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

First of all, having followed the negotiations for the Safe Harbor Provisions when they were happening, I can assure you that based on the discussions then, videohosting sites that shared files publicly were not considered “service providers”. Service Providers were defined as companies like ISPs that hosted files they knew nothing about, that the users had full discretion over, and did not reside on a website owned by the ISPS (which would give the ISP discretion on how the files were delivered ie Flash/progressive download, as opposed to the user defining how and to where.). So the fact that videohosting sites are not Service Providers could exclude them from Safe Harbor Provisions by definition. But that takes the fun out of this blog post, so lets be like Google and pretend its not an issue.

Like the contest in Seinfeld, Google and Youtube think that if the users tell them they didnt do it, then it must be true, they didnt do it. They want to ignore all evidence to the contrary. Kind of like what 12 year old boys hope their moms do when they do laundry… to continue the Seinfeld reference.:)

The way i read the Safe Harbor Provisions, the part that says:
(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent;

is the Youtube killer. If you get a takedown notice from one source for 29,543 videos, you are aware of facts or circumstances from which infringing activity is apparent.

If you are Google, you can easily set up a search like this , which is basically using their features <site:youtube.com “This video has been removed” > to see that you are getting so many takedown notices per day, that maybe there is quite a bit of infringing going on.

Then there is the “Does Not Receive Financial Benefit directly attributable to the infringing activity”. Well when you look at the links for content taken down, glance up at the banner ad on the page. Thats financial benefit.

Now Google of course will and can argue all day long that they didnt know about any given video and the fact that it was infringing. They will argue on a per video basis. They didnt know. If someone knows and they tell Google or Youtube, they take it down. All within the letter of the law.

Whats interesting in the meantime before we get to the big lawsuit that will come, is that in anecdotal testing, obviously infringing videos that were uploaded to Google were rejected as not being elgible to be uploaded. The same video uploaded to Youtube , had no problem being uploaded and hosted. This was in the past several days.

It looks like Google is hedging their bet on the Safe Harbor Provisions despite saying otherwise on their conference call.

Whether they are or not, my bet is that when the Safe Harbor Provisions are tested in court, and they will be, the decision will come down to this. If you own a domain name, you are responsible for it and everything copyright related that is posted and happens on it. You MUST be the master of your own domain. If you are not able to be, you will be liable to any infringing acts on the domains you own.

Thats what I think the courts will decide.

Does this make Youtube the Kramer of videohosting sites ??

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While we all wonder what the content companies will do going forward with Google and Youtube, you have to wonder what Apple is thinking and how they will respond.

They have to be sitting their with eyes wide open as they watch 3 of the major record labels sign some sort of deal with Gootube that rewards them with 40k shares of stock each, worth more than 15mm dollars that from appearances will allow Gootube to offer music videos for free from the Gootube site.

In the past, offering free music videos would not have been perceived as a big deal. Music videos are just commercials for the sale of CDs ? Right? Wrong. That notion is “so last century” to paraphrase some commentators these days. The days of Music Video as commercial ended when Ipod added video. A downloaded music video file with full fidelity vs a downloaded music song at full fidelity song can sound exactly the same on an Ipod . Of course there are sometimes little differences from video to song to make the video more entertaining, but nothing that would make the song any less enjoyable when listening on an Ipod or other portable media device, and there is the value of watching the video itself.

Apple has realized this, and as a result priced music videos at $1.99 and songs at 99 cents.
It worked for them too. It used to be that most people who wanted to acquire music legally and easily went to Itunes Music Store(ITMS). According to Apple on their latest conference call, ITMS is 85pct of all legal downloads in the US. On that call, Apple also said that “ITMS was run above break even with the primary goal of selling more IPods and accesories.” But what was more interesting to me was their mention that Music Sales were flat quarter to quarter. Apple said this was due to seasonality. Time will tell if thats the case

While it used to be ITMS was the path of least resistance to legal music downloads in the past. That position is quickly being replaced by Youtube. As i have written earlier, its just too easy to convert the music videos that Youtube downloads to my computer over to Ipod format. ITMS has lost business from me. I believe they are losing business across the board. While some people think that its too much hassle for most people to do the conversion, that problem is disappearing quickly. A cottage industry of software apps is being built around Youtube. Its getting easier by the minute to download music to your IPod .

But thats not the worst part of it for Apple. Apple had pretty much flipped the notion that it was impossible to compete with free. They had done a great job of making it easyto buy anything short form, music, video, whatever. But they were competing with companies that were purposely in the background for fear of being sued. People who used bitorrent, grokster, limewire did and do know they were getting their music illegally.

Its different on the video hosting sites like Youtube, Grouper, etc. The owners of the sites all make the point as loudly as they can that everything they do is legal. Then Youtube is bought by Google AND they do deals with the music labels . So everything and anything that happens on Youtube must be legal. So forget going to ITMS for music. Lets go to Youtube. Its perfectly ok to convert the music Youtube downloads to me over to my IPod (of course if youtube and google truly were legal in their videohosting, there never would have been a reason to do a deal with these music companies at all, would there ? )

It will definitely impact the sale of online music and music videos. But more importantly for Apple, it wrestles away control of music sales from Apple and opens the door for MicroSoft for their new Media Device, and for any other Portable Media Player that supports video. The number one application MicroSoft should ship with Zune or make sure is available from a 3rd party for free ? A Youtube downloader. Just read the quicklist on Youtube, and download to your Zune. Fast, friendly, free music just for your Zune. Why spend 99c or 1.99 per song on ITunes when its free for your Zune!

All the music you can eat, Google pays. How great is that ! Not so great for Apple.

Apple is smart enough to have picked up on all of this and Im sure Steve Jobs and Eric will have a nice little chat about it.

And while we are on the topic, I think the music labels got the better part of the deal with Google. Three companies, $50mm dollars. You have to sell a lot of music on ITMS to net $50mm dollars. Im not saying it was a bad deal for Google. It was probably only 120k shares. They wont miss that. But the devil is always in the details.

It will be very interesting to see just how long the deals were for. Was it just till the end of the year ? Time enough to see if the new Content Filtering Software application works ? Was it 1, 2 years or longer ? Personally, I would be suprised if it was longer than a year. If that is the case, then the music labels pimped out their music video catalogs for 15mm plus a share of ad revenue per year, each ! Google in essence, “prebought” every download that would have been sold over at Apple and gave it away for free without any DRM, and they gave up a pct of their ads. Again, not a terrible deal for GooTube unless the music labels expect to be paid the same amount every year.

So we could have an interesting year of watching Apple to see if this change in where music is discovered impacts their competitive situation. Watching the labels to see how much they can get paid for licensing their catalogues. Will it be 15mm plus ad share per year or get sued ? What will other content providers who didnt get their 15mm think ? Will they sue to prove a point that you cant leave them out ? Will Google just write checks or give stock to the entire universe ?

Speaking of lawsuits. It will be very interesting to see how the Universal suits against Grouper and Bolt play out. Grouper has already said they are on firm ground. I of course dont agree. I think they will get nailed. It will be interesting to see if Sony gives them money to fight the fight. I also think that Universal will settle with Bolt.com . Im just guessing here, but if Im them, knowing Bolt doesnt have deep pockets, I make them settle on the exact terms of how Doug Morris wants to see video sharing sites deal with copyright. I would make bolt.com the poster child for what video sharing sites have to do to be in compliance and avoid lawsuits from Universal and by proxy the other music labels and most likely other content providers. Using bolt.com to get that level of control and a public admission that the Safe Harbor provisions of the DMCA dont apply will help Universal far more than any financial settlement or from forcing sites like Bolt.com into bankruptcy and getting nothing

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Ive written about the music industry a lot on this blog. The music industry faces a lot of challenges, not the least of which is convincing people to pay for their products. Which is exactly why I tend to get confused when they do deals that commoditize their products and re inforce the notion that music is free.

Lets start with music videos. Music Videos used to be promotional. Labels sent them to cable networks, TV shows big and small that played music videos, clubs, websites, etc. Music Videos were commercials for music. They were enticements for people to buy CDs.

Then things changed.

The Labels realized that businesses that needed music to survive should be paying for the product. So they licensed the music. When customers did pay or live up to their side of the bargain, they pulled their videos.

The changes got more dramatic when the Ipod/ITunes Music Store and sale of digital singles and albums took off. Music customers started to become comfortable not only with buying digital music by the download, but also with using their computers as a staging platforms to transfer music to portable devices.

Then those portable devices got fancier. They started to support video. Portable media players that support video, created demand for music videos. Which meant that music videos immediately went from commercials for music, to being a product itself. Buy a song with no video, 99 cents. Add video, $ 1.99 .

Which leads to the question, is a downloaded song worth 99cents ? Is a downloaded music video worth $1.99 ? Which leads to the bigger question, what is the best way to generate the greatest amount of revenue and profits from music ?

Some people speculate that on the net, where there are eyeballs, there is ad money. If there is enough ad money around music, sell the ads, give away the music. Personally, I think thats a fools game. Advertising is cyclical and ad cycles and pricing dont match the qualities that sell music. Music is personal. EVeryone has their own preference and how advertising is sold and consumed may not match. Plus, for music labels, the minute music is valued relative to ad sales, they lose control of their product. They lose pricing control They lose control of their destiny. The last position you want to be in is hearing why revenues are way down because the advertising market is down. That CPMs are down. That there is too much inventory, etc, etc. All things that have nothing to do with music. You cant all of the sudden start charging $1.99 for a downloaded music video that weeks ago was free.

So if labels are licensing their catalogues for download or progressive download (as opposed to streaming) without limit to websites and getting a percentage of revenue, they are setting themselves up for a huge hit, and not just financially.
You think the Dixie Chicks or Barbara Streisand or Green Day might be a little upset if videos for any of their songs have pre roll ads, or text ads, or banner ads for a Republican candidate for Congress ? You know what is going to be harder than trying to keep copyrighted videos off of a hosted website ? Tracking what advertisers are acceptable to an artist.

But i dont think the labels would make that mistake. Risk their relationship with artists or control of their business to share some ad revenue ?.I dont see them doing that as part of a license to any video hosting site. Despite reports that suggest the contrary, my guess is that the labels made an exceedingly smart deal this time around. The speculation has been that the labels didnt want to be left out of the “latest thing” , that they didnt want to miss the boat or make the same mistake they made with Napster. I think its the other way around. Google didnt want to miss out on an acquisition. Im guessing that this time the labels got the best of the deal.

If reports are true, and 4of the labels were able to do a deal that paid them in aggregate, 50mm dollars worth of Google stock, Im guessing all they gave up was just a limited license to use their videos for some limited time period with a TON of strings attached. If i had to guess how the labels characterized the deals internally, they probably agreed not to sue the sites for a limited period of time while they tried to develop software that helps protect their copyrights, figured out a DRM strategy and proved out what the potential revenue opportunity really is. For giving Gootube this opportunity, they get what amounts to 4k shares of Google stock each. Thats 50mm worth of stock. More than 10mm each. They are probably laughing at how many music videos and songs they have to sell in order to net 50mm dollars .

Its a great deal for Google too. 12k shares of stock, even if its worth 50mm dollars has a minimal impact on shareholders and it protects Google for the shor t erm . The question is for how long and what comes after the deal expires ? You didnt think the license was forever did you ?

Which takes me back to the question of digital music videos and songs and getting paid. Downloaded Music Videos and songs are basically the same thing on a portable media player like the IPOD. The music is still music and sounds the same when you are listening whether you watch the video or not.. This means that they cant give away music videos. It would be the same as giving away the song. Why would anyone ever buy a song on ITunes if the music video was available from from a video hosting site ? They wouldnt. Which is exactly why I dont beileve we will see the labels licensing their music videos in exchange for a share of advertising revenue in any but a pure streaming environment like Yahoo has. The licensing issues have been worked out on the streaming side. Downloading video, which is what Gootube and most video hosting site has a lot of work to do before it can work for the labels. Its just not going to happen the way the sites are currently structured., Right now, Gootube is turning music into a commodity. Users have the perception that its free and always will be. That will hurt the labels in the long run and they know it. For 50mm , 3 of the labels were bought off. Smart move on their part if its a short term move.

Of course there is the problem of every other content and rights owner. They are going to want their cut as well….

It will be interesting to see how it all plays out.

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There has been a lot of discussion on the net about TIme Warner’s Dick Parsons comments to the UK Guardian.

I’m not going to guess what they might do, but its a lot of fun to discuss what their and other big media companies options are. Some people play fantasy sports. I like to play Fantasy Business.

There are a ton of different options, Im going to discuss a couple here because its an interesting excercise in understanding business. Some peole like to think that “this time its different”. Its not. Its always about money and control. Thats been the case forever. The only real question is whether you can make more money by giving up control.

Google is a brilliant example of control. They never give it up. They jealously guard everything, from their ranking algorithms to their business metrics and more. They control in detail every aspect of their business. Its not like you see Google giving away their search results to meta search engines for free. Not at all. All traffic comes back to Google.

What google does that again, is completely brilliant, is have complete confidence they can make money on any arbittrage of traffic vs cash. The arbitrage goes like this. Company X, say Myspace, AOL, Dell , etc has been able to generate X$ in cash against Y traffic they have been experiencing. That company wants to generate far more money against that traffic. Google knows they can do a better job than company X at monetizing that traffic. The arb is pretty straight forward at that point. Give company X a magnitude more than that company could generate on their own in cash, and then keep all the excess cash that Google generates on that company’s traffic.

If you go to the non search engine places that create the most traffic outside of Google and buy them or contract for their traffic, you in essence take them out of the search advertising game. THey cant help your competition. You have pre empted a major player. Brilliant.

So the question is whether or not we are seeing the beginning of the same approach with video. The answer to the question has a profound impact on the strategic alternatives a major media company would consider in working with Google/YT. If Google is able to sign licensing deals with the major content providers and basically get carte blanche, we wont sue agreements in exchange for promotional considerations, revenue share and lots of money up front, they win. Now that win could get set aside if a small video hosting company loses a lawsuit that sets a precedent that changes the rules of videohosting. (ie, they have to monitor videos and determine copyright status before a video is posted to the site), but if not, Google, by lining up any deals, regardless of cash involved, that keeps them from getting sued, and allows them to exploit all the video treasures of the major content libraries, wins, hands down.

Which brings us to the options for the major media companies.

1. Take the money, promotion and revenue share.
Most of the analysts out there feel like this is what will happen. That google will be so generous with the cash, along with their fear of “missing out” that the major media companies will not be able to say no. Personally, I think its a mistake to do so. I have a rule that you never turn over a core competency to a 3rd party at any price. Selling your product and advertising in and around your product always has to be a core competency. Sales are the lifeblood of any business. If you turn it over to someone else, you are at the mercy of their ability. Even if they can do a better job than you, you have to figure out how to do a better job than them. It might cost money in the short and medium turn, but it saves your business in the long run. For a major media company the amount of money that might come from Google wont change their fortunes dramatically. HOWEVER, the opportunities that changes in technology and how consumers interact with that technology could change everything, leaving the media company on the outside looking in.

Plus, once its ok for your content to be uploaded , even with guidelines, you have just created a competitor that can repackage your content. You might have limited the length in time of the clips, put in “taste” guidelines , whatever, but you wont be able to limit packaging. So for instance, if Sony does a deal that allows Seinfeld clips up to 30 secs long. That seems innocent enough until the videhost takes the 4k plus Seinfeld clips and creates a Seinfeld page. The Seinfeld page could have Seinfeld polls and contests. The Seinfeld page could hire Jerry Seinfeld himself or for a lot less money, Michael Richards as Kramer, to host video on the now grown to Seinfeld minisite, that talks about his favorite clips. All completely out of the control of the rights holder. The folks at Peekvid.com have put together a very simple example of where this will go. Put some Ad Publishing around it, some video pre or post roll, or even a seperate commercial on the page as many sites are doing, and Peekvid has made some easy money. Any content licensee could easily do the same thing or do both. THe mini site, the index, and who knows what else in order to create new inventory.

The rules on how best to monetize and exploit video have not been written yet. Giving up your core asset to someone who is probably smarter and better prepared than you to exploit the rights of your assets isnt usually a good move. It violates my negotiations rule. When you sit down at the negotiating table to do a deal, you always look for the fool. If you dont see him/her, its you. IN other words. Always assume you are missing something until you are sure you are not.

2. Keep your content exclusively for your own site and let users access and post content from there.
With a few exceptions, all of the major media companies draw millions of users per month to their sites. True, thats not Google or YT traffic, but they arent trivial either. Rather than leaving the door open for Google/YT to let users post away and HOPING that the content identification software they are working on works, why not take control ? Why not slice and dice your own content up in as many ways as you can think of and make it available to all comers to use ? You could limit the clips to whatever size you want. LImit the encoding to whatever quality you want. Its not like you dont have the assets digitized already and couldnt figure out how to do it. I look at it this way. If ESPN can figure out how to pick their 10 plays of the day from all the games being played on any given day, a major media company can hire a bunch of kids out of school to post the fun stuff in huge quantities and make them available for anyone to use. But wait, there is more.

Whats the point of just hosting and posting clips, songs, whatever if the user is just going to take them over to Youtube, AOL Uncut or where ever ? Well its technology fool. You know that these sites use FLV files. You know that FLV supports ALL KIND OF FEATURES. When you offer these encoded goodies, build in the things you need. Offer to pre encode their final product yourself under the value that the Youtube upload process will be sped up considerably

You can even have instructions on your site on how to create mashups and encourage people to do so.

This wont apply to every video that gets posted on Video Hosting sites, but it sure is a nice first step towards taking control of matters. User Generated Video, particularly being able to enhace the video with unique features, to take it beyond kids in front of their webcam or DVcam is just beginning. Personally, i think making it simple to add cool features in front of theupload process could make a difference in where non tech savvy people host the videos they create..

The downside of trying to retain
control of your videos is having to monitor all the 3rd party sites for your content and then sending out take down notices and supoenas. Someone is going to make a nice business out of doing this, but until then its a pain. At least until the law is changed or the video hosting sites lose a lawsuit that results in them having to analyze video for copyrights rather than every copyright owner having to do it.

By retaining control of your own content, there is no question you might lose some eyeballs in the short term. But whats the rush ? The value of a a user watching User GEnerated content with your content has yet to be determined along with just how much traffic any given video will generate. Which makes it tough to do a deal for a library of content. Plus, it has yet to be determined what the competitive impact of preventing a videohosting site from hosting files with your content. Which in composite makes it look early to do any type of deal for a library.

Here is another way to look at it. Google VIdeo, Youtube, AOL Uncut and various other hosts of user generated content have been around for more than a year and have had tens of millions of users each month watching billions of videos. What have all those views translated into econcomically for content owenrs ? THere have been aggregated eyeballs, but what else ? Has there been a FINANCIAL hit for any content owner ? Has anyone actually made money from the content they uploaded ? Has a DVD been sparked to new highs in sales because of clips of uploaded video ? Has a video download been purchased in significant numbers because of uploaded video ? Have TV shows reached new rating highs ? Sure there has been some content that has been seen in numbers greater than those on TV, but so what ? If that video hadnt been available, would anything be different in the universe other than some people missing a giggle at Tucker Carlsons’ expense ? Bottom line, anyone who sat it out so far, hasnt missed a thing. Once there is a model for monetizing and setting parameters of use, and legality, then things could change. Until then, all i can see that we know from videhosting sites is that Users Love Free.

3. Do a cross licensing deal with other content rights owners.
Why not take a page from the big technology company playbook. They cross license patents all the time. Why not do the same with content ? Create a set of parameters that apply to how you think User Generated/Uploaded content should handle copyrighted content. Length, encoding parameters, file size, audio quality, whatever. Then do a cross licensing deal that allows those you let into the group to offer your content from their site within the set parameters and vice versa.

From there, you let each company set the licensing price for their content, but kick back a percentage to a law firm that does nothing but check for your copyrights on hosting sites, and issues the takedowns and supoenas for all those in the cross licensing deal, and possibly even files suit to protect the rights of the copyright owners.

All of the sudden, the leverage is completely upside from where it is now. The videohosting companies will find out very quickly how valuable
user generated content is without access to the biggest content libraries. THe same hosting companies immediately are dealing with the onslaught of legal documents, which in turn impacts their businesses. Advertisers now are completely at the mercy of joe and sally’s creativity without the brands to connect to. Thats going to be harder for them to sell.

Meanwhile, with access to the biggest copyright libraries, each of those companies that partciipate can go to work creating their own user hosting environments and compete on the merits of their products, and more fully enable user creativity with access to the copyrighted content. Your advertising sales forces can maintain control of the products within the set guidelines and leverage their ownership of their content to create better, branded environments for advertisers.

Of course when its all said and done, it will still require unique approaches to monetizing the video , and enabling new user experiences. It remains to be seen whether the traditional media companies, even with some smart new media people at the helm these days will pull it off. But sometimes a good old fashioned revolt, even when it comes from big companies, can make things interesting.

Personally, arguing about business strategy is fun. Its how any business person learns. Watching what the major media companies, and the major online companies do in this space is going to be fascinating.

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In previous posts, i had said that the minute Youtube got bought, the media companies would sue them because there were now deep pockets to pursue for a big payday.

The more I read and the more I thought about it since the Google/Youtube deal, I realize that is the exact opposite of what should happen and probably will happen.

Rather than suing Gootube, the media companies will first sue several of the imitators and competitors that have no money whatsoever. They wont sue those companies to get money, they will sue a bunch of those companies to build precedent. In particular, they will sue to get clarification on the DMCA Safe Harbor laws. Are these little companies, that do basically what Youtube does, protected by the DMCA safe harbor rules ?

If they can win some judgements saying these little sites are not protected by Safe Harbor rules, then they have all the leverage in the world to dictate licensing terms to sites that until now have not proactively enforced copyright but have instead chosen to rely on rightsholders takedown notices. If one of those sites has deep pockets, then it could turn into a payday for rightsholders, whether via lawsuit or licensing terms.

One more thing about this whole discussion about Youtube, Google and how the DMCA might be interpreted.

There has been a lot of discussion about whether Gootube, together or seperately would qualify under the safe harbor laws. Some think yes, others like me, think not. But the reality is this. Whatever copyright owners let Gootube get away with, there will be an unlimited number of sites that copy that approach.

However Google tries to monetize Youtube, others will try to replicate that model. If when its all said and done, Google falls within the Safe Harbor rules of the DMCA, you can expect thousands of spam websites, the multimedia equivalent of splogs, to spring up. Just as its simple to automate the process of creating a blog or website and then populating that site with RSS feeds and ads by Google, Yahoo or another ad syndicator, just like this it will be just as easy to create a website that automates the uploading of a server full of multimedia content, movies, music, whatever.

This is what will happen. THousands of times a day.

Someone will fill a huge server (s) full of everything and anything,movies, music, termpapers, pictures, whatever they think has the greatest chance to make them money. THen they will create host splogs. Lots of them. The splogs will be optimized to enable scripts/bots to upload content, and users to download that content.

There will be the standard disclaimer on each splog that they probably steal right from Google or Youtubes site. There will be an about link providing where to snail mail the take down notice. The servers with all the content will go from splog to splog, automatically uploading great content. You will see best-report36.com/top10songs or best-reports45.com/itunes100, best-reports55.com/foxprimetimeschedule, et c, etc, etc. In addition to the great content, you will see multimedia ads in whatever format Google uses that has been copied by competitors. As long as they can place the multimedia ads in such a fashion they can pay for the bandwidth, what could go wrong ? According to some, all of it is legal and protected.

THe splog creators have the full protection of the Safe Harbor rules. Users uploaded the content. The sploggers took down content when asked. Maybe if they are tricky, they will populate each with at least 51pct of non infringing videos. Of course every site will have the same non infringing videos, but so what.

There in lies the rub. Whatever Gootube is allowed to do is going to be replicated thousands of times. Searching tens of thousands of splog sites you dont know exist for your content is an awful tough job. Supoenaing sites to get information about users who did the uploading from the big server becomes futile when the registration required nothing more than a random gmail address.

I just dont think the MPAA and RIAA and their members are going to accept this inevitable scenario. Its quite possible that by the time they are under siege with all of this, Gootube will have 100pct of its content licensed. If not, then after they go after the little guys to set precedent, they will go after the big guys and their deep pockets.

Here is a sample of a Splog. Notice the ads

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