Friday, July 4, 2008

Viacom vs. YouTube: Beyond Privacy

Just before the holiday weekend, media giant Viacom (VIA) won a legal victory over YouTube that set off fireworks across the Internet. The July 1 ruling gave Viacom access to records of what people watch on YouTube, which is owned by Google (GOOG) and is the most popular video site on the Web. Bloggers and consumer advocates warned of the potential privacy violations, particularly if Viacom uses the information to track down and sue people who watch copyrighted video clips on the site.

But there's an even larger issue at stake than privacy: The legal tide may be turning against many of the most popular companies on the Web. Numerous Internet companies, from YouTube and Flickr (YHOO) to eBay (EBAY) and MySpace (NWS), have built their success on the participation of their users. In the past, the courts have been quite clear that if those users violate laws—by posting copyrighted video of Viacom's Comedy Central shows on YouTube, for example—the Web company is not liable.

Increasingly, however, the courts are siding with rights owners and ruling that Web sites are responsible for illegal submissions. The new legal position, if it becomes the standard for the industry, will have profound implications for Internet companies everywhere. They may have to change their business practices to proactively screen out user submissions that could violate laws. That could dampen the growth of Web sites that depend on user submissions, and, in some cases, make their business models untenable.

No comments: