[A2k] Geist:YouTube can avoid Napster's fate

[Michelle Childs]

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[ Picked text/plain from multipart/alternative ]
http://news.bbc.co.uk/1/hi/technology/6055830.stm

YouTube can avoid 'Napster's fate'
Internet law professor Michael Geist argues that YouTube will avoid
the fate of the original Napster


'Two companies launched by 20-somethings burst onto the public scene
and provide instant access to a seemingly unlimited array of popular
content. Within months, they become household names with tens of
millions of devoted followers.

Emboldened by dreams of striking deals with entertainment companies
that will assure future growth, investors quickly rush in, setting
aside lingering copyright concerns to offer financial backing.

The similarities between Napster and YouTube seemingly end there.
Napster, the poster-child for online music file sharing, failed to
convince the record industry to licence its content after taking the
Internet by storm in 1999.

It was soon after sued out of existence, resurfacing as a struggling
fee-based music service. YouTube, the site that in 2006 became
synonymous with online video sharing, was purchased last week by
Google for US$1.65bn.

Lost amid discussion of YouTube's staggering price tag was the fact
that hours before confirming the sale, Google and YouTube signed a
series of licensing agreements with some of their harshest critics.

Companies such as Universal, who only weeks earlier had mused
publicly about suing YouTube, agreed to the very revenue sharing
arrangements that eluded Napster.


While some media companies, including Time Warner, speculated
publicly late last week about possible lawsuits, it is worth
examining why YouTube appears to be succeeding where Napster
failed.At least three possibilities come to mind.First, the
differences in legal status of Napster and YouTube may have
contributed to the different approach.

Napster's peer-to-peer model raised the spectre of contributory
copyright infringement, whereas YouTube's Web-based distribution of
user-generated content - much of which does not infringe copyright -
likely qualifies for legal protection under US copyright law.

Legal status is unlikely to provide the complete explanation, however.

Though the legal risk associated with the two services may differ,
viewed from the perspective of a content owner whose work is being
infringed, there are clear parallels given that both services
represent new distribution models not easily subject to copyright
owner control

.Second, some may argue that YouTube complements existing copyright
owner business models since it provides a torrent of free publicity
without cannibalizing other revenue streams.

In contrast, the recording industry maintains that P2P file sharing
is directly competitive with its own online offerings.

This argument also falters under closer examination. There are a
growing number of online services that sell episodes or clips of
television programs, placing YouTube in a competitive position for at
least some of the content found on the site.

Moreover, there is reason to doubt that P2P is a significant
competitive threat given that there are many other likely
explanations for the downturn of some record labels including retail
price pressures, declining catalogue sales due to lack of
availability, and competition from DVD sales.

The best explanation may well be that seven years after Napster's
debut, the world views the value of Internet-based distribution
through a much different lens.

In 1999, Internet distribution focused on the use of law and
technology to control content and dictate terms of use.

That control has proven notoriously elusive with consumer backlash
against technological and legal controls and emergence of highly
efficient user-based distribution models.


Furthermore, it is internet advertising revenues - not internet
controls - that today hold the promise of billions of dollars in
revenue.

Indeed, the Internet economics of 2006 have shifted so dramatically
that later this fall the recording industry is planning to launch
SpiralFrog in North America, an ad-supported music download service
that offers free music downloads (albeit with restrictive
technological limitations).

Given these changes, what is the likelihood that a new licensed P2P
model will come to the fore in the near future? Better than you might
think.

There are several such initiatives currently underway, the most
advanced of which appears to be Noank.

The brainchild of Terry Fisher, a Harvard law professor, the system
is billed as a "digital media exchange" and is expected to launch in
China sometime next year.

Once operational, it will enable ten million Chinese university
students to freely download music and movies with no technological
restrictions.

The service will be funded by a mandatory student fee (similar to a
student activity fee), with 85 percent of the proceeds distributed to
participating artists and content owners.

Fisher estimates that the service will generate US$200 million per
year from these fees alone, with additional advertising revenue
possibly doubling that figure.

Having made significant progress in China, Fisher has identified
Canada as the project's next target with private discussions already
underway with rights holders, telecommunications companies, and
record labels.

During the height of Napster, experts estimated that even a five-
dollar monthly fee would have generated billions in additional
revenue for the content industries, yet those companies chose instead
to sue the P2P services along with thousands of their users.

The YouTube deal may foreshadow a reversal, with the industry at long
last ready to embrace the remarkable commercial potential of the
internet. =EF=BF=BC
Michael Geist holds the Canada Research Chair in Internet and E-
commerce Law at the University of Ottawa, Faculty of Law.