Sure, YouTube might have a good legal defense
to anyone who sued them for copyright infringement, but the lawsuits would still be pretty pricey. Not surprisingly, that was part of the sticking point in the negotiations between YouTube and Google before Google finally finally pulled the trigger
. In order to make that issue go away, we already noted that YouTube did questionable deals
with most of the major record labels the morning before they signed the Google deal -- effectively cutting them in on the deal. Now Mark Cuban is posting an email from an anonymous industry insider that provides a few more details while making the whole deal even more questionable
. As the earlier article noted, YouTube was told to negotiate with effectively a blank check (signed by Google) with the record labels to get them to lay off YouTube for a while. But, here's where it gets interesting.
- The deal was an investment, not a licensing agreement, meaning all that cash the labels got they don't actually need to share with the artists they always claim they're trying to protect. This was done on purpose.
- While Google and YouTube have apparently put $500 million in escrow to deal with copyright lawsuits from smaller players, handing over cash to the labels came with a promise that the labels wouldn't sue YouTube for at least six months.
- At the same time, they would sue other players in the space -- which we've already seen from Universal Music.
Add it all up, and you get the music labels effectively taking a bribe to cause trouble for Google/YouTube video competitors, ignoring YouTube to let it grow for a while, and pocketing all of the money without giving it back to the artists they supposedly represent. The claim is anonymous, but the pieces certainly fit together nicely. It would be nice to see an alternative explanation, as this whole thing reads pretty sleazy.