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in Filmmaking
on Nov 5, 2006

On October 18 I posted a few quick comments on the Google/YouTube deal. Specifically, I concluded my posting by wondering if any of the artists whose work has been streamed on YouTube will see any cash from the “copyright infringement” settlements that are part of the deal.

Here’s what I wrote:

The question then becomes, what mechanism or accounting system exists to reward individual copyright holders from the revenue “shared” with Universal by YouTube? Do artists signed to Universal see (or do their balance statements reflect) this income? And what about all the other artists whose video is being shared on YouTube and other sites? If there’s no way of accounting for the traffic generated by a Universal artist, is Universal then sharing in the revenue generated by the material produced by non-Universal artists on YouTube who lack a threatening corporate giant in their corner?

Now, Mark Cuban puts up on his blog an anonymous posting from the Pho List, a “media-related list” that he has participated in for years, that purports to have some inside info on the deal. (“I’m an experienced veteran in the digital media business and thought I’d share my version of events that happened at Youtube,” the poster writes. “Some of this is based on talks with people involved and some is speculation based on my experience working in the industry, negotiating settlements and battling in court.”) Cuban goes on to say that his post hasn’t been fact checked and that he can’t guarantee it’s accurate, but that it “rings true.”

If you’re interested in the Google/YouTube deal — or the business models of user-generated streaming media sites like YouTube — it is must reading. And check out this passage, which confirms the strange smell I picked up from the deal in my earlier post. It deals with the media companies’ response to suddenly having substantial sums of money presented to them to not file copyright infringement lawsuits.

“The media companies had their typical challenges. Specifically, how to get money from Youtube without being required to give any to the talent (musicians and actors)? If monies were received as part of a license to Youtube then they would contractually obligated to share a substantial portion of the proceeds with others. For example most record label contracts call for artists to get 50% of all license deals. It was decided the media companies would receive an equity position as an investor in Youtube which Google would buy from them. This shelters all the up front monies from any royalty demands by allowing them to classify it as gains from an investment position. A few savvy agents might complain about receiving nothing and get a token amount, but most will be unaware of what transpired.”

But really, that’s just an excerpt. Read the whole piece.

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