chump change
Mark Cuban passes along some supposed inside knowledge about the whole Google / Youtube deal. It’s pretty interesting, if, well, if you find that kind of thing interesting. Some of what’s going on seems blatantly illegal to me. According to this, close to a third of that $1.6B went straight to the media companies to quash lawsuits. It’s long, but here’s a bit:
> 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.> […] 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.> […] 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 video copyright infringement.
> Universal obliged and sued two capable Youtube clones Bolt and
> Grouper. This has several effects…
If this is true, then why are clips still getting pulled? Apparently everything from The Daily Show and The Colbert Report got dissapeared this week.
Someone pointed out something interesting in the comments to the post:
Google changed their official philosophy a while back. It no longer reads “Do No Evil”. Now there are “Ten things Google has found to be true”. One of these 10 things is “You can make money without doing evil.” So, they admit that they can make money without doing evil, but it is not strictly against their philosophy to do evil. And this is a perfect example.