Viacom vs Google/YouTube: Negotiations By Other Means

Michael Hedges March 15, 2007

Viacom filed a huge law-suit against YouTube, and thereby Google, charging copyright infringement. Billion dollar law-suits make headlines not unlike an 80 year old buying his first red Ferrari. Customers and investors – literally and figuratively – beware.

Business negotiation by other means refers to law-suits. Companies bring law-suits against other companies. Governments – and the European Commission, too – bring law-suits against companies. The intent is always the same: Get something that somebody does not want to give up. Force them to the negotiating table.

It is an insidious practice – certainly not limited to Americans. Most often the practice demonstrates common stupidity. Picture the frustrated big-shot (corporate or government) screaming: “Get me a lawyer!” “Get me a Ferrari.”

That people by the hundreds of thousands flock to YouTube for sharing video clips, often with comments, irks Viacom Chairman Sumner Redstone. Those people are “using” his content and not bothering to visit the Viacom distribution – also known as CBS Television and MTV. What’s worse, Google – sorry, YouTube – has advertising and advertising is pouring onto the web and out of traditional media.

Cisco filed a law-suit against Apple over the iPhone trade-mark, charging infringement, even though the companies were in negotiations. Settlements followed. Apple paid. Everybody is now friends. The European Commission and European governments bother not with law-suits, simply levying fines against media companies – often non-European – refusing to open their coffers to less capable competitors. Governments – if opinion polls are studied – have no friends.

Redstone’s YouTube/Google law-suit is different. It points directly to the frustration of traditional media – in this case, television – in bringing its once huge leverage to bear over new media. Not only do those new media people not live in New York by choice they do not quake and shake when the old guys demand conformity – or a substantial cash payment.

A spate of law-suits against Google have been expected over the YouTube deal since the day it was announced.  For traditional media Google’s aplomb is like the beach bully kicking sand in the eyes of the wimp and walking away, smirking, with the bikini-clad bimbo. It isn’t polite, necessarily, but it’s the rule of the jungle. Traditional media doesn’t like playing the part of the wimp on the beach.

Failing to wrestle MySpace from the clutches of Rupert Murdoch, Viacom CEO Tom Freston faced the ire – and axe – of Chairman Redstone. Failing to cough up ever increasing profit margins CBS CEO and super-salesman Mel Karmizan fell to the axe. New York’s streets – Wall Street included – are littered with Sumner’s failures.

The folks from Google don’t intimidate easily. Flush with astronomical cash-flow, investors endearment and, not inconsequentially, hubris they seem to relish these challenges, much like the Microsoft of an earlier age. The cash, endearment and hubris attracts to Google’s side very smart lawyers ready to “make a difference.” Read: screw the old guys. It’s a war of generational titans.

Belgian publishers took Google to court demanding their headlines removed from Google News. The Belgian publishers, unable to extract cash from Google, sued and won. Google lawyers barely paid attention, as if to let unintended consequences take their toll. If news from Belgium becomes hard to find consumers do not necessarily go to extreme lengths, including payments. Belgian news simply disappears. Eventually, so does Belgium.

Frighteningly, traditional media has forgotten newsstand value  - shelf space - and its role in consumer behavior. Long understood and just as long ignored by publishers – and completely beyond the comprehension of the television people – is the very consumer-friendly display of their wares – their headlines, their content, their added-value. Better able to understand the unintended and destructive consequences, the World Association of Newspapers, the European Publishers Council and the International Publishers Association have begun working on rights solutions to prevent the Belgian mistake from being repeated.

Still – mostly – visible in urban Europe and Asia but missing from western suburbs and long gone from America is that ensemble for the curious on the street corner; teasing, often provocative. It has moved to a new neighborhood. Google – and other internet “indexes” – are the 21st century newsstand. It is the wise who help them flourish.

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