Google In Frantic Talks To Halt YouTube’s Legal Threat; Offers Tens of Millions In Upfront Money

Updated below: Google is in frantic talks with big media companies to halt any legal threats coming YouTube’s way, reports FT. We already knew Google CEO Eric Schmidt and other managers have met with CEOs of CBS, Viacom, Time Warner, NBC Universal, News Corp and others. Now the story says Google is offering tens of millions of dollars in upfront payments for the right to broadcast their video content legally on YouTube.
The story says that if Google fails in its effort YouTube could face the same fate as Napster, though I don’t see that happening. The needle has moved too far, both on consumer behavior as well as business models, for that to ever happen.
“The fact is that in three to six months every media company’s going to decide that their stuff gets taken down or that they get paid for it,” a media executive said, likening the negotiations to “a big chessboard”. The music labels like Warner Music, Universal Music and Sony BMG have settled, in exchange for licensing fees and a share of associated ad revenue, as well has some equity stakes in YouTube worth tens of millions of dollars (though I am not sure if that happened prior to or after the acquisition, and if it did happen prior, would it hold after the deal closes, or would they just get payouts?).
After this, the story says, Google has turned its attention to the film and TV companies, offering one $100 million to license its content over a two-year period, the story says. I bet that was Viacom, for the very valuable and extremely popular Comedy Central content.
It is all playing out in real time, folks.
Updated 1: Now AFP says that English Premier League and German Bundesliga are unhappy about their videos clips on YouTube. And the German football league (DFL) is considering taking legal action against the company for the unauthorized use of images from the Bundesliga.
Updated 2: WSJ has another story about the complexity of negotiations, and some of the points it highlights, pertaining to music label talks:
— Most of YouTube’s agreements with record labels don’t address royalties for music publishers, who control the copyrights to the words and music underlying the recordings. YouTube or its partners must locate parties ranging from studios to actors, and from music composers to the owners of venues, and get them to sign off.
— AllianceBernstein L.P.’s Bernstein Research estimates that about 15% of YouTube’s 100 most popular videos are video material edited to music tracks. The story say that once publishing deals are negotiated, publishers are likely to be paid around 10% to 15% of whatever share of advertising revenue is set aside for content owners.
— CEO Chad Hurley says the system the company is building for managing commercial content should eventually be able to automatically dole out ad revenue-sharing payments to a multitude of rights holders for any given video clip.