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Google’s Maginot Line: Will Google Wake Up to It in Time to Unwind the YouTube Deal

November 3, 2006 Comments off
Now it starts to sink in: YouTube is a mess. (See “Google’s YouTube Blunder“; “Does YouTube MakeGoogle a Big Target For Copyright Suits?” Google YouTube success ‘not a given'”,
and more daily).

The business press is starting to perk up and do the analysis that the Googles should have done before they ever thought about acquiring the GooTube. And here’s a newsflash: Like everything in the creative community, it takes a village to bring a creative work to market. There are a lot of rights holders out there, and ignore them at your peril.

We are starting to hear the same old whine from the Slacker 2.0 crowd: Waaaah, it’s too hard, Mommy! There’re record companies and artists and publishers and writers and unions and producers and samples and they all want money, Mommy!! Mommy, my head hurts!!

That’s right, young Master Skippy. And that’s just the records. The system you complain about now is the system that created all that value you are stealing, so what’s good for the goose is good for the Google.

A common theme amongst techies on this subject is that Google is so big, rich and powerful that there’s no price to buy off the creative community that Google cannot pay, and pay easily. This is said in that hushed tone that the aethistic cult of Google worshipers reserve for that vicarious–sorry, I know that’s a scary word for some people these days–thrill that weak geeks reserve for rich geeks.

Riddle me this, though. Sure they have the money, but why should Google be allowed to use their stockholders’ money to make these payments? Why is it a good use of their stockholders’ money to permit a blunder of this scale? Why should any corporation be allowed to buy what may well turn out to be a criminal enterprise–before it has properly dealt with the offending activity? Shouldn’t the rule be that public companies can’t buy sketchy businesses until after they are brought into legal compliance? You may like Google and buy into its cult of personality, but would you like it so much if it were Bechtel, Exxon, or Microsoft and if it weren’t cultural works but maybe black market nuclear weapons, polluting engines or stolen technology? Isn’t that what we have the RICO statutes for?

As Google’s Cardinal Richelieu–Professor Lessig–likes to say, what is the principle? Unclear at best, except that Google doesn’t care much for copyrights. But we knew that already.

However, the most interesting thing about the GooTube is not the copyright issues–Google would like to keep everyone focused on that, and their belief that somehow the DMCA “safe harbor” protects massive infringers. How about right of publicity? Trademark infringement? Palming off or reverse palming off? No safe harbors on those, kiddies. No notice and takedown–that’s just for copyright, and copyright is just one of the claims. And it’s a bit late in the day to try to clean your hands.

What distinguishes experienced and savvy business folk from the Skippy Dot Coms is that they are supposed to thoroughly review both the benefits and the risks of doing a deal. Even Skippy Dot Google should have the brains to see that YouTube was going to be a big, huge rights mess. If they listened to Professor Lessig, they got the same bad advice he’s given to all of the other entrepreneurs who ran their companies into the ground listenting to his extraordinarily innane gibberish.

At least Eric Schmidt should have seen this coming. He was brought in for adult supervision.
So supervise, dude. Unless you’re a racketeer, too.

Keep this in mind when you’re signing the financial statements that have the YouTube risk factor: Our failure to keep our hands in our own pockets and to look before we leap may have a material adverse effect on our business.

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