News: Dallas Mavericks owner and tech billionaire Mark Cuban attacked YouTube again before a group of New York advertisers. Cuban said that only a “moron” would buy YouTube, and predicted that YouTube would be “sued into oblivion” with copyright infringement lawsuits. “They are just breaking the law. The only reason it hasn’t been sued yet is because there is nobody with big money to sue.” (More from ZdNet)
On his Blog Maverick, Cuban is a little bit more restrained in his assessment. At least he doesn’t use the word “moron.” He states: “Im holding to my prediction on Youtube. The complexity of rights issues. Their lack of DRM. And that doesnt even account for the stupidity of subsidizing Myspace and hosting how many videos on myspace pages, millions ?? The minute they try to monetize those videos, you can bet Fox will have their own solution waiting to release. No Youtube on Myspace ? No Youtube on how many other pages once they start to try to incorporate ads (Yeah I know they said they wouldnt). What happens to their traffic ? All of the sudden rather than being the darling, the articles will be talking about the dramatic decline in traffic.
“If they dont incorporate ads, then thats even worse. Again, that means they are hosting the video of the net for free. Thats an ugly, no win business.
“A word of wisdom to the Youtube folks, sell if you can. A word of wisdom to a potential buyer, the minute the labels see even the hint of deep pockets they are going to come after you for all your worth. It will be a Lawyers Employment Act. Just ask Bertlesman about being the deep pockets behind Napster. Its not different this time.”
Analysis: I’ve already explained here why I think Cuban’s predictions about YouTube’s decline is wrong. Let me add a few more thoughts.
1. Businesses do not perceive YouTube as Napster. One of Cuban’s central premises is that YouTube is the same as Napster and will meet the same demise. I don’t think that’s right, technologically speaking. Importantly, YouTube allows sharing of video (not audio) files. The video files are very short clips and do not substitute for the actual copyrighted shows or movies. In fact, many broadcast and cable shows have permitted short clips of their shows onto YouTube, basically, for free advertising.
You only need to look at the timeline to see that businesses have treated YouTube differently. YouTube is nearly 1 year and 7 months old, and still the movie and music industry have not sued for alleged copyright infringement. By contrast, Napster was just 7 months old when the major record labels sued it. YouTube has already secured deals with NBC, Warner Music, Cingular, and other legitimate businesses.
2. Big money could have sued YouTube by now. Cuban is just dead wrong that the reason the industries haven’t sued YouTube is for the lack of money. Are you kidding me? The RIAA has been waging thousands of cases for music file sharing, and the movie studios joined in for the Grokster case. I think the reason the music and movie industries have remained on the side lines is that both recognize the potential gold mine in having a website that attracts millions of eyeballs each day.
3. Business deals can take care of IP problems. One of the big points that Cuban misses is that businesses quite routinely strike deals to take care of potential IP problems. For example, early on, Yahoo sued Google for patent infringement on its search technology, and yet Google still exists today. How? The two parties struck a deal, in the face of uncertainty over who held the IP rights to the search technology. Likewise, Warner Music has already struck a deal with YouTube to allow its music to be used on YouTube. In such case, the uncertain copyright issues vanish.