Rumor: Google pays media companies to leave YouTube alone

An anonymous blog posted on Mark Cuban's Web site accuses Google of paying off large media companies to make YouTube's copyright troubles go away.

The unidentified blogger claims that he or she is a veteran digital-media executive with knowledge of Google's purchase of YouTube.

"Some of this is based on talks with people involved," wrote the blogger. "Some is speculation based on my experience working in the industry, negotiating settlements and battling in court."

Among the claims are that YouTube agreed to set aside $500 million of the $1.65 purchase price paid by Google to acquire the company earlier this month to help "buy peace" with entertainment companies.

YouTube allows users to submit homemade video and some of them instead post clips of TV shows, movies, music videos and other copyright material. The practice has helped draw millions to YouTube and frustrated some of the larger media conglomerates. Cuban, the founder of HDNet and Broadcast.com, has been critical of YouTube in the past and said just prior to YouTube's sale that any one who bought the company was a "moron."

Cuban said in a note attached to the blog post that he has not verified any of the facts has but said he trusts the source.

According to the blog, posted on Blogmaverick.com, Google has agreed to pay $50 million to some of the major companies that have demanded compensation from YouTube for copyright infringement.

In some of the more serious accusations, the blogger says the media companies have agreed to take a stake in YouTube that they would eventually sell to Google. This way, the media companies could avoid paying actors and musicians a licensing fee.

Artists typically receive a share of licensing deals.

"This shelters all the up-front monies," wrote the blogger, "from any royalty demands by allowing them to classify it as gains from an investment."

Google also requested that the media firms sue some of YouTube's competitors to ensure that YouTube wouldn't disarm copyright material unilaterally and to give YouTube six months to sweep its site of unauthorized material, according to the blog.

"If they simply agreed to remove all unauthorized content and saddle the user experience with ads, YouTube would quickly be a skeleton of its prior self," according to the blog.

The blogger noted the lawsuit filed earlier this month by Universal Music Group against video-sharing sites Bolt.com and Grouper. The suit did not name YouTube.

"There are some interesting chapters yet to unfold," the blogger wrote. "One is how much of this will become public. Google is required by the (Securities and Exchange Commission) to disclose material financial developments at their company. Working in Google's advantage is their enormous market capitalization, and revenues will give them considerable leeway to claim that a $50 million transaction is not significant to their business."