Could peace be near for YouTube and Hollywood?

Google's YouTube is quickly shedding its reputation in Hollywood as a clearinghouse for pirated content and could soon be home to clips from popular movies and TV shows--all legally obtained.

Insiders say the search company has adopted a more accommodating approach toward Hollywood, and that it's finally starting to pay off. Last week, Lionsgate struck a content agreement with YouTube in a deal that calls for unprecedented cooperation between a major film studio and the Web's largest video-sharing site.

That agreement is likely only the beginning. Other big media companies are in talks with Google about similar deals, say sources with three different entertainment companies. They detailed the ways Google has become more flexible in talks about sharing revenue and helping protect films and TV shows against piracy.

"We've been working with them on filtering and they're doing a pretty good job," said an executive at a major media company that has been critical in the past of YouTube's antipiracy efforts. "We're pretty impressed with the results and their ability to identify our clips and allow us to automate the process."

Google has piqued the interest of some in Hollywood with new ad-delivery and content-tracking technology that the company is developing

Google has also piqued the interest of some in Hollywood with new ad-delivery and content-tracking technology that the company is developing, according to three studio executives who spoke to CNET News. Google could one day enable content owners to insert ads into unauthorized video clips wherever they might be posted online.

Ricardo Reyes, a YouTube spokesman, declined to comment about Google's business dealings, but did say YouTube's commitment to copyright protection hasn't changed. "We've always been committed to it," he said.

Should Google succeed in convincing Hollywood to share content on YouTube, many of the company's copyright woes could be put behind it. Google could also generate new revenue from selling ads against popular television shows and films.

Hollywood could profit from piracy
As it stands now, Google doesn't advertise against the vast majority of YouTube clips. It can't legally sell ads against pirated content and homemade video at the site is often too controversial or mundane to appeal to advertisers. Licensing more professionally made content could be the answer to Google's disappointing attempts to make money off the volume of content available on YouTube.

The new ad-distribution technology Google is working could go a long way to mitigating the damages caused by copyright violations. A digital fingerprint is made of a piece of video and is used to locate unauthorized clips. If the owner chooses, an ad can be inserted into the video. To do it, Google has been considering a partnership with Auditude, a start-up that has impressed many in Hollywood with this type of technology, according to three sources with knowledge of the talks.

A representative from Auditude declined to comment for this story. A third competitor, Vobile, has also caught the attention of studio executives, said one of the sources.

Google CEO Eric Schmidt hinted that his company was working on this kind of technology during the company's quarterly earnings call on Thursday.

"Lionsgate works with people who upload segments of the Lionsgate movies that they like and they capture them using our ClaimWare content product," Schmidt said.

He continued by saying ClaimWare finds a copyright owner's videos and enables the copyright owner to display ads next to them.

"The days of the 50-50 split between content owners and Web sites are over."

--entertainment executive

These kinds of systems, however, don't solve all of the entertainment industry's problems, said one executive at a major media company. Film studios would be profiting from (rather than punishing) piracy. "Sure, it's easy to say, 'Wouldn't it make sense to monetize these unauthorized clips,'" said the source. "But if you say 'Go ahead and make unauthorized copies. We'll just make money off of them' aren't you legitimizing piracy?"

Did litigation and mediocre revenues change Google's tune?
None of the people who spoke to CNET News knows for certain what led Google to soften its approach toward the entertainment sector.

But few in Hollywood have missed Schmidt's recent comments that YouTube is struggling to make significant income. YouTube is also defending itself against a $1 billion copyright infringement suit filed by Viacom last year.

And while YouTube is still the Web's dominant video site, with 34 percent of the market according to ComScore, the site has begun to see major entertainment players gravitate toward competitors, such as Hulu, the video portal backed by NBC Universal and News Corp.

Hulu may have already hurt YouTube and Google in one significant way, according to one media executive. The portal has helped to establish revenue splits between online video distributors and content owners.

"The days of the 50-50 split between content owners and Web sites are over," said the executive. "Content owners are not going to take less than 70 percent anymore and some are getting 90 percent. In Hulu's case, 70 percent goes to the content owner. Hulu takes 20 and the Web sites who have distribution deals get 10 percent."

These aren't close to what Google was willing to accept in the past, but the search giant now appears more willing to compromise, said two studio executives.

Conversely, the studios realize that Google, despite concerns over YouTube revenues, isn't exactly playing a weak hand: YouTube has more than 70 million unique monthly visitors, making it the third-most visited site on the Web.

"YouTube and Google were the 800-pound gorilla (in the online video sector)," said one of the executives who has been involved in negotiations with the companies. "They had all the distribution and all this pirated content and you couldn't monetize without them."

On Monday evening, Viacom CEO Philippe Dauman respond to questions posed by reporters at a gathering in San Francisco and said in his view YouTube started out as a "rogue company." Google's hardball negotiating tactics with the studios and TV networks only served to further alienate decision makers in the entertainment sector, he suggested.

Dauman said that eventually Google must learn the value of "making friends."

[jamalystic]

I think this is a welcome move by Google. Reputable companies like Google with their "no evil" mantra should not be seen to destroy the intertainment industries. Youtube needs professional content and it's time they worked out an amicable settlement with holywood in order to alleviate the troubles youtube has brought on the entertainment industry: Top 10 Ways YouTube Has Ruined Life for Good(http://www.internetevolution.com/document.asp?doc_id=155235&F_src=flftwo)

[bbqtv]

We have been providing origional content to YOUTUBE for some time, along with other open IPTV sites. Our esperience has been very positive worldwide

[ralfthedog]

Long term the big media companies are dead. For many years, the big three networks controlled access to media. They told us what we liked and we watched it. They began loosing control when new networks hit the market.

Now the only factor preventing people from entering the market is talent. Many of the best authors, directors and actors are talking about leaving the studios behind and distributing everything by internet.

Here is a good example.

http://www.drhorrible.com/

Warning, it starts of cheesy but gets good.

[The_Decider]

The days of huge media conglomerates that dictate content are long over. They just haven't clued themselves into that fact yet.

[Harrison912]

I have to agree with ralfthedog. Just tonight on the news I heard that a college football player's agent put together a tape of his client's ability and put it on YouTube then sent links to all the scouts.

Pretty cool idea!

[EZII]

This is pure spin. If Google was really serious about going legit with Youtube, they'd settle with Viacom. As it is, they're all in. If they lose, why would anyone cut a deal. They just sue and win.

[rawiliam]

We are a YouTube premier partner and I have to say their ID technology is superb, and the management interface simple to use.

We're based in the UK, and much of your discussions and articles here are obviously US centric. YouTube may have competition in the US from the likes of Hulu, but Google understands and makes the effort to localise their products for a global audience, and copyright laws vary markedly around the world. Some have more stringent laws than the US, some have no laws at all. What YouTube and other similar sites are doing both consciously and unconsciously is forcing a rethink on Copyright law. Copyright will and must always exist, but with new technology developing at the exponential pace we are now used to, prosecuting and acting on successful prosecution on a global scale will be impossible.

All content owners need to be realistic in their expectations of how their content can be managed and financially exploited (isn't that the point?!), and although there will be issues as outlined by others in terms of fair use, it wouldn't take much to set up rules based on territorial copyright laws to display relevant advertising, e.g. a Prince song used as background music on a clip may not be claimed, but an ad for the album could be displayed in much the same was as keyword ads work against editorial content - a split for the video owner and the ad network, with the potential for a few cents per click that the visitor will buy the track or album or go to the next concert etc.

Bottom line - you can spend a fortune securing your copyright, or you can make a fortune securing your copyright, but you can't do both.