Thursday, October 19, 2006

That Explains It

Yesterday I posted on how Google/YouTube avoided getting sued by Universal. Well, now it seems that the answer to why not has come:
Three of the four major music companies — Vivendi’s Universal Music Group, Sony and Bertelsmann’s jointly owned Sony BMG Music Entertainment, and the Warner Music Group — each quietly negotiated to take small stakes in YouTube as part of video- and music-licensing deals they struck shortly before the sale, people involved in the talks said yesterday. The music companies collectively stand to receive as much as $50 million from these arrangements, these people said.
You read that right. To make sure Big Music wouldn't sue over "pirated" music videos and amatuer lipsyncs, they were given ownership stakes in YouTube so they could reap the windfall of Google's $1.6 billion purchase of the company. A combined $50 million is paltry compared to $1.6 billion, but it helps explain why Bolt and Grouper were unable to strike deals with the music companies before being sued. In fact, I'm not even sure that YouTube has brought in $50 million, but such a deal sets a high bar for other such video and music sharing sites if $50 million and a share of ownership is the going rate for avoiding a lawsuit. It all sounds fishy.

I wonder if Google requires YouTube not to be evil?
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