The $1.65 billion price-tag that Google paid for YouTube grabbed all the headlines, but there's a very big underlying story that's just now coming out. The New York Times reported today that just prior to the deal being struck with Google, Vivendi’s Universal Music Group, Sony and Bertelsmann’s jointly owned Sony BMG Music Entertainment, and the Warner Music Group, all agreed to take stakes in YouTube. No doubt this was a move to appease the labels that had strongly hinted that they were considering lawsuits against YouTube for the video-sharing site making copyrighted material available. And I'm sure that this was a strong factor in whether or not Google agreed to purchase YouTube.
But here's the potentially huge problem: An additional element of the deal with the labels involves YouTube upgrading their existing technology to identify copyrighted material that users have uploaded to the site without permission.
I think we all know where this is likely headed, YouTube gives the information that it collects to the music labels, and soon every parent in America whose child has uploaded a music video to YouTube, has a letter in their mailbox threatening legal action against the family, which the label will agree to drop if the unknowing parent can pony up $10,000. Does anyone really think this isn't the road the RIAA and the labels are headed down?
Yes, apparently we still have to say outloud that 'Suing your own customers is bad for business'.