Be Chaotic Neutral

The Google / YouTube looks like a win-win all around. Well, almost.

Google:

• Acquire the future of video on the Internet for roughly 1% of your market cap.
• Get $500M in escrow to protect against copyright lawsuits
• These are lawsuits that Google would probably have to defend YouTube against anyway, even if Google didn’t own YouTube. Huh? Let’s see, YouTube stores and serves up copies of videos without copyright holders’ advance permission and removes them when removal is requested, under DMCA Safe Harbor. Google copies books, and serves up copies of pages without copyright holders’ advance permission…

Youtube and shareholders:

• 1 Billion plus reasons to be thrilled
• Uncle Google takes on monetization risk and legal risk

Major labels:

• $50 Million each
• A promise from YouTube that within 6 months, the copyrighted nasties will be gone

Losers:

• Small Labels: Don’t have the money or the resources to mount a serious legal challenge to Google. Didn’t get paid.
• Small video-sharing sites: The major labels are going to sue them out of existence to establish a precedent, doing the dirty work for Google et al.
• Artists: Royalties? What royalties? The $50M to each label is structured as an equity investment, and not subject to royalty splits.

So, Google gets the prize, the labels get the money, YouTube gets the payout, and Google extends its one-time massive copyright violation to build critical mass, while using the labels as enforcers to make sure that no one can repeat the YouTube story.

Yes, you can make money without being evil. But for YouTube’s competitors, small labels, and the artists, evil is relative.