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Why Google Wanted a YouTube Lawsuit
An anonymous reader writes "After YouTube was purchased for $1.6 Billion, there was rampant speculation that Google would soon be waist-deep in billion dollar lawsuits. Despite the enormous liability issues, Google purchased YouTube for a mind-numbing sum, leaving many doubters wondering if Google considered all of costs involved. A theory has been put forth explaining what Google may have been thinking when it bought the company." From the article "Letting YouTube fight this battle alone with their own lawyers might have resulted in a very public and unnecessary loss that would have crippled Google's video ambitions and possibly caused collateral damage to a bunch of related industries (especially search)." In short, the author argues that Google had a lot more to lose had it kept away from YouTube and let the old-media companies crush it with lawsuits."
The sad thing about this is that it actually does make sense that Google should buy Youtube for the reason stated in the OP.
It is really sad how the interpretation has become a matter of who can afford the most lawyers and things like that. I think this is a trend that is seen at it's strongest in the USA but we sure also see this here in Europe and Denmark where I live.
In my simple mind the law should be equal for everyone no matter how much money they have, but that really is being naive these days as far as I can figure.
I don't know if my thinking here is to much influenced by movies like Civil Action, but then again it claims to be based on a true story (and the movie is almost 10 years old, so I guess this isn't a new trend, at least in the US).
I tried Googling for their reasons, but results aren't conclusive.
By this interpretation, Google could have waited for the lawsuits to start and then buy YouTube for very little money, they could have saved a Billion.
When his defense asked, "Which computer has Jon Johansen trespassed upon?" the answer was: "His own."
Google could have filed amicus briefings on behalf of the defendant (they did so a couple years ago when yahoo was being sued).
But the proposition is backwards. youtube had no money or revenue. Google has both. That's a big red "sue me" sign stapled on their back.
Goooooooooooooooooooooooogleeee.... Biiiiiiiiiiiiiiiiiiiiiig!!!!
I'm seriously hoping that things remain open, as far as video sharing goes. But, I feel that if Google makes all sorts of deals with the media companies, we're likely to still end up with restrictions on how/what we share.
Thats why they have Amicus curiae briefs. If Google just wanted to help YouTube defend themselves, they could have filed such a brief for much less than the 1.6 billion (or whatever it was) they spent on YouTube. Or if they really wanted to take an active role in the lawsuit, they could have waited for it to be filed and then bail out YouTube for much less money. Though its questionable whether or not they would have ever been sued in the first place had YouTube not been bought by someone who could pay up.
No matter how you cut it, this would have been a silly strategy. Can we please stop pretending we are on Google's board of directors and posting all this speculative BS on what we think they are doing or will do in the future? Please?
Mathematics is made of 50 percent formulas, 50 percent proofs, and 50 percent imagination.
So I have to carry a "Sue me!" sign around to get bought by Google because they want to prevent being sued too for carrying a more or less similar sign around?
Sounds like a business model.
If that were the case, google could just donate money to youtube to pay for their legal defence, and not get involved with actually owning the company. It would cost an insignificant amount relative to the $1.6B purchase fee, and they wouldn't have to pay damages in the event of defeat.
Thats why they paid over the odds for a company begging to be sued so they could turn it into a target too rich to resist.
Its far more likely Google wanted to be a dominant player in a market other than search so badly they forked out the $1.6 billion knowing a lawsuit would likely follow if they could not negotiate a quick settlement and apparently in the process overvalued not just youtube but also the amount of clout they hold with the content providers.
Do not try to read the dupe, thats impossible. Instead, only try to realize the truth
What truth?
There is no dupe
I'd bet money that Google bought YouTube to get face time/leverage with television/movie execs. Google has failed miserably to get the entertainment folks on board. I think they made an expensive gamble that they could leverage YouTube to get the studios on board and they lost.
They paid in stock, which they basically printed themselves. Not the same thing as actual dollars. Valuable yes, but not the same.
I can't help but think back to Napster. Its obvious that if YouTube was left alone, it would eventually be crippled by lawsuits. I could picture YouTube becoming something like Napster2, "merging" with one of its plaintiffs. Makes me wunder what the world would be like now if Google was around to buy Napster back in the day, spooky....
If a company issues stock for a purchase, it dilutes the existing stock base, so it isn't like they're creating value out of thin air. if 100 shares exist, and the company's worth $100K, the shares are worth 1K each. If they print another 100 shares, all 200 are worth $500 each. Usually, stock used for purchase is already "printed" but part of the reserves of the company, so it doesn't devalue the shares, but that actual value of ownership (just as if it had been bought at market with cash) transfers to the designee.
it's EXACTLY like they paid cash, and then they took the cash and bought stock at market with it. It certainly isn't "printing money" like you implied. If you think the company will go up, it's better than cash. Since the market's open to sell the stock, they can dump it for cash and get full value for it.
Simple econ. Stop trying to make a normal business transaction sound like something nefarious...
It is not even close to being cash. They are giving the owners of YT ownership in Google. If it was cash they would be giving the owners only cash, and they would have no ownership in Google, unless of course they used the money to buy some. The Google stock is not the same as cash because right now Google's stock is over valued compared to other companies. If you think in the future there will be someone willing to pay even more for it then yes it could be worth more than the cash, but only if you sell it then and all of that is SPECULATION. Cash is not speculation.
So to one perspective it might be cheaper than 1.6 billion in cash and to another it might be more expensive than the 1.6 billion. However, one of them is based on speculation and one isn't.
Google's stock price is more volatile than the value of cash.
Whether this rationale was actually Google's reason or not, it certainly makes sense from a legal perspective.
I was involved in a copyright dispute in federal court that was even more unbalanced financially than one that would have pitted YouTube alone. From the intitial documents filed by the opposing lawyers (and sadly, a major publisher), it was clear that the lawyers involved were hoping to bring the precedent of a much criticized 1998 Second Circuit (New York) decision involving a book called the Seinfeld Aptitude Test into the equally important Ninth Circuit (West Coast). I was to be a victim too poor to mount an effective defense. That, coupled with a naive judge (should they draw one), would place the two most important IP districts under Castle Rock (the bad 1998 decision). And it would make it virtually impossible to write about popular fiction (Seinfeld, Star Trek, and Godzilla movies had already been impacted) as anything other than dry literary criticism without paying the copyright holder. Very, very nasty. I had the lawyer for a university press tell me that the mere threat of the legal dispute I was facing had caused them to quite publishing books about popular contemporary fiction.
Fortunately, the lawsuit was assigned to a brilliant judge and, with some good advice from various lawyers, I created a powerful enough argument for fair use that the opposing side bailed out at summary judgment, followed by the judge dismissing their lawsuit "with prejudice." My book is now in print.
Unfortunately, I had neither the money nor the skill to force this case to last long enough to overthrow the infamous 1998 Castle Rock decision. I had a lawyer tell me that if I'd won at a district court trial, and if I'd also won at the appeals level, my case would have then be binding in the Ninth circuit, putting it at odds with the Second circuit, and putting it on a fast track for the Supreme Court. Only then would that 1998 decision be null and void. As it stands now, it remains a threat hanging over publishers. So in the end, although I won despite a legal system heavily loaded in favor of the deep-pocketed, the 'bad guys' were able to retreat, lick their wounds and prepare for another attack.
In short, the only upside to our legal system's heavy tilt in favor of those with money is the fact that from time to time we see two powerful sides contending, eventually setting a precedent that may benefit the rest of us. That's what we have here.
All they need to do is give content owners first dibs on content creation and presentation (and possibly quality options) on GooTube. It's just a giant moving billboard, and the content owners want more influence on how their content is presented, and how their revenues are derived.
For the guys suing them this is just negotiation by other means.
We all live in a state of ambitious poverty. -- Decimus Junius Juvenalis
I thought they were ready to tackle Copyright reform. We read about the UK reforming Copyright laws, and I think its time companies with some smarts tackle the same issues stateside. It would be really nice if Google is able to help start a movement towards Copyright reform.
Relocating to San Francisco / Palo Alto... Hire me?
It also matters in the Death penalty. Case in point, how often have you ever seen a rich person get the death penalty? See: http://en.wikipedia.org/wiki/Arthur_Goldberg
There's litter all over my neighborhood. Obviously current enforcement isn't enough to keep it clean. Should we escalate the penalties until the litter stops? Much of that litter is from the local McDonald's - shouldn't they be doing something to stop this menace? (If I could think of something they could reasonably do I'd be all for it, but I can't. I'm certainly not going to propose taking away their business license because their customers suck.)
We don't pass laws to produce perfect compliance. Attempts to do that - such as the "War on Drugs" - seldom succeed; the consequences are often worse than the original problem. Persistent lawbreaking, in and of itself, is never sufficient grounds for strengthening the law. Unfortunately, copyright enforcement in the U.S. seems to be following the path blazed by the drug enforcement.
To be fair, you say you're divided about fair-use rights vs infringement on YouTube. But from your phrasing, it appears that the effectiveness of anti-infringement efforts is the deciding question.
To agree with other responses to you, personally I think this infringement is about as bad as littering. Actually, littering is probably worse, as it is a gateway to worse crimes (see broken window theory).
I compared copyright infringement to littering. But every method I can think of for preventing infringement for personal use does more harm (social, economic, and political) than good. I can imagine a world in which there is no prohibition on personal copying - and I think it would be a better world. Of course, that's not the world we live in, and there is some harm done even when a bad law is broken (for some laws, the good of breaking the law may exceed the harm). Litter, in contrast, would still be a problem even if it were permitted.
So I don't really believe that (private) infringement is about as bad as littering. I think littering is much worse.
Then bought YouTube with a discount?
The value of cash is pretty volatile as well - maybe not quite as much so as Google stock, but certainly volatile nonetheless.
In the case of the United States, the Dollar has been fairly consistently falling against the Euro for the past 120 days or so.
It could only be speculation from the buyer's perspective. Since there's still an open market, from their view it's EXACTLY identical to being paid in cash and deciding to invest the cash in Google stock.
From Google's perspective, there's no speculation. Their balance sheet is EXACTLY as if they sold held stock for cash for the transaction, and paid for the transaction with cash.
Volitility doesn't come into play for Google - they paid an expense with a fungible commodity. Once ownership's transferred, for Google, it's identical to the same transaction carried out with cash.
For the new stock owners, if they want to keep the stock, fine, but it isn't like Google didn't PAY $1 for $1 stated worth of transaction, that just isn't supportable, and that's what this conversation started with.
The real reason why Google bought YouTube wasn't just to protect their market share, it is instead to redefine the copyright world as we know it.
Basically Google does not believe that the way copyright law is and has been defined over the decades is longer relevant. As such I believe they have bought YouTube with full knowledge that they will get sued, however their aim being to change copyright laws for benefit of their bottom line, but also more fair for the average person.
Let's see how it all pans out, but if Viacom throws less money at the lobbying and less money at lawyers they could contribute to the demise of copyright law as we know it today into something much more different that would finally benefit the masses instead of individual IP owners (owners being the operative word as opposed to content creators).