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news.cnet.com
May 24, 2010 3:55 PM PDT
Not long after Google acquired YouTube, the search engine offered nearly $600
million in guaranteed revenue if Viacom--the parent company of MTV Networks, Comedy
Central, and Paramount Pictures--licensed its TV shows and films to YouTube, records
show.
News of Google's offer was revealed in documents released on Friday by a Manhattan
federal court and reviewed by CNET. In March 2007, Viacom filed a copyright lawsuit
against Google and YouTube and it has become one of the most watched legal disputes
in the tech sector.
In a deposition given by Google co-founder Larry Page on October 1, 2009, a Viacom
lawyer pointed out that Google's senior management made an offer to Viacom that
Google had figured was worth $592 million.
Later during the deposition, Stuart Baskin, a Viacom attorney, presented Page with
copies of internal Google correspondence that he said showed Google had concluded by
November 14, 2006--a month after Google acquired YouTube--that Viacom's video was
the "most valuable content of any other premium content provider." Also later in the
deposition, Baskin said records showed Google's offer to Viacom was five times more
than the guaranteed minimum offered to Turner Broadcasting System and eight times
more than one made to CBS (parent company of CNET).
Baskin told Page during the deposition that Google made offers to CBS and Turner for
minimum guarantees of $60 million and $75 million.
According to Baskin's remarks during the deposition, Viacom wanted $700 million from
Google. Though Google's offer never went anywhere, a source close to Viacom said
this was not the only offer Google made, nor was it the best. The offer seems to fly
in the face of efforts made by YouTube executives to downplay the importance of
Viacom's materials after the company ordered YouTube to remove unauthorized copies
of its content. The news also indicates Google made significant attempts to reach an
agreement with Viacom prior to their legal dispute.
The revelation is just the latest intriguing information that has bubbled up from
court records in the dispute over the past several months. All these tidbits,
however, may not mean much when it comes to deciding the case's crucial legal
questions.
Viacom defended YouTube
Viacom claims in its copyright complaint that Google encouraged YouTube users to
violate copyright law by posting unauthorized clips to the site. YouTube denies the
allegations and says the Digital Millennium Copyright Act's safe harbor protects the
No. 1 video-sharing service from liability for the copyright violations committed by
users. There was precious little in the documents released Friday that offers much
more insight into whether YouTube is protected under the safe harbor provisions or
not.
"The difference between YouTube's behavior and Grokster's is staggering. While the
Supreme Court's language IS broad; the precedent is not THAT broad."
--Michael Fricklas, Viacom's general counsel
Until a judge or jury decides the issue, the two sides appear content to hammer away
at each other by exposing each other's dirty laundry to the public. On Friday,
Google appeared to score big points by noting the existence of an e-mail from
Michael Fricklas, Viacom's general counsel, where he appears to defend YouTube's
business model and qualifications for protection under the DMCA.
"Mostly, YouTube behaves--and why not," Fricklas wrote in July 2006. "User-generated
content appears to be what's driving it right now. Also the difference between
YouTube's behavior and Grokster's is staggering. While the Supreme Court's language
IS broad; the precedent is not THAT broad."
A Viacom spokeswoman noted that Fricklas' e-mail was sent in July 2006 and the
lawyer "was informally remarking that YouTube appeared to be attracting a great deal
of traffic" and "in a few short months, it became clear to Mr. Fricklas and others
that YouTube's behavior was egregiously unlawful."
That Viacom's top legal representative appears to have given YouTube a clean bill of
health could make Viacom execs look like hypocrites to members of the public, but
may not be necessarily relevant to a judge. Fricklas' statements, however, could
take on more importance if U.S. District Judge Louis Stanton sends the case to a
jury.
Would a jury take Fricklas' word that he changed his mind on the issue following
more extensive legal analysis, or did Viacom's top legal officer flip-flop because
his company failed in a bid to acquire YouTube not long after he made his statement?
Larry Page: 'I can't recall'
On the other hand, what would a jury think of Page's deposition?
In three hours of questioning by Viacom lawyers, Page couldn't remember a single
significant detail about Google's acquisition of YouTube. Consider that Page has
earned a Ph.D in computer science from Stanford, helped build one of the most
powerful advertising vehicles of all time, and is one of the top three executives in
a company that generated $23 billion in revenue last year. Yet, he can't remember
important and basic facts about his company's biggest acquisition or even some about
his own company.
Page was asked whether he remembered discussing YouTube's potential copyright
problems prior to the acquisition. He was asked whether he discussed with other
company leaders and advisers the $1.65 billion price Google eventually paid for
YouTube. He was asked whether the video-sharing service created by his own company,
Google Video, ever filtered for pirated content prior to the acquisition (It did).
Page answered dozens and dozens of these and similar questions the exact same way:
"I can't recall."
In contrast, Google CEO Eric Schmidt offered plenty of details in his deposition a
year ago. He remembered that he discussed the YouTube acquisition with his board,
which includes Page, and even remembered recommending that Google pay a $1 billion
premium for YouTube.
"Larry wasn't involved in operational YouTube matters," a Google spokesman said of
Page's deposition. "Viacom's attorneys knew this and yet continued to badger him on
topics and technical issues he didn't and shouldn't have been expected to know."
Other juicy tidbits that are getting a lot of attention include the colorful terms
the two sides have each used to describe each other in e-mails.
"F*** those motherf***ers," a Viacom executive wrote.
"I hope they die and rot in hell!" wrote a YouTube employee.
Again, these bon mots probably won't have any effect on how the case is decided, but
like a fight between the two toughest kids on the block, it's hard to look away.
http://news.cnet.com/8301-31001_3-20005810-261.html?tag=newsEditorsPicksArea.0
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