Record Labels Not Planning On Sharing YouTube Windfall With Musicians

from the it's-all-for-the-musicians,-huh? dept

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.

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  1. identicon
    Shane, 31 Oct 2006 @ 9:36am

    not a bribe...

    Ahm, in full view, I don't think this would be considered so much a bribe, as payment on a Protection Racket.

    Looking at this in perspective;

    • A protection racket is usually done by a larger, more expansive group. (while Google has lots of money laying around, they don’t begin to have the influence in producing money / laws that the *AA’s have accumulated)
    • Protection money is usually paid so that “bad things won’t happen to you.” “…handing over cash to the labels came with a promise that the labels wouldn't sue YouTube for at least six months.”
    • Securing a payment from one victim allows racketeers to “reinvest” (coerce) to bring in additional profits from other areas. At no point in time does this solve problems for anyone else (anyone else with money). “At the same time, they would sue other players in the space…”
    • Protection rackets don’t often commit the offending attacks themselves. They simply let it be known that said group is not under their protection. [wikipedia reference] (this is the equivalent of letting the individual labels know that Google/YouTube is free game in the courts)
    • Protection is usually carried out by large, monolithic organizations that are past their prime, and have not adapted to the future. (personal opinion)

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