News: LA Times editorial writer Jon Haley has an op-ed piece on Sunday, comparing and contrasting YouTube and MySpace to Napster. Although Haley suggests that YouTube and MySpace are different from Napster because they are websites and have deeper pockets, they could end up like Napster: “The best result would be for Universal and its entertainment brethren to work out a way with MySpace and YouTube to turn people’s enthusiasm for posting songs and clips into a robust revenue stream — assuming that the sites can gin up enough money to make everybody happy. In another parallel with the original Napster, MySpace and YouTube haven’t found a way yet to generate much revenue from advertisers or users. And the longer that remains true, the greater the chance that the companies will meet the same fate.”
Analysis: It’s now banal to compare YouTube to Napster. Mark Cuban did it last month, and I’ve offered all my reasons why I believe he was wrong in all these posts here. So far, I have to say that my position has proven more accurate, given YouTube’s continued, growing business.
I think LA Times writer Jon Haley is barking up the wrong tree when he says that YouTube and MySpace may be different from Napster because they are websites (as if Napster wasn’t) and they have deep pockets. Napster was a website, too; it invoked the DMCA safe harbor as well but was shut down before it even had a chance to take that defense to trial (although it’s not clear it had a DMCA policy in place, anyways). Also, the fact that YouTube and MySpace have deep (parent) pockets could make it more attractive, not less so, for copyright lawsuits.
What Haley is missing (and Cuban as well) is that a growing segment of big corporate America – Cingular, CBS, NBC, Warner Music, Universal Music Group, Sony BMG – sees YouTube as a legitimate business, and a business that can also serve their interests. That’s a key difference betwen Napster and YouTube. YouTube is changing the way corporate copyright holders think about enforcing their copyrights. Here’s what CBS exec David Poltrack stated last week, “When you have something the public really wants, the economic value in that is to come up with a way to satisfy the rights holders and serve the consumers. . . If they’re [consumers] going to steal it, give it to them anyway.”
Of course, I don’t want to overstate the change in the view of copyright holders, or understate the risk of copyright liability that YouTube or MySpace faces. Copyrights still exist, and sometimes (but not always) they give rise to lawsuits. Universal Music is suing MySpace, but not YouTube. The DMCA provides a potential safe harbor for YouTube and MySpace, but, if litigated, the issue will be contested. By the same token, businesses and corporate copyright holders probably understand, more today than they did before, that shutting down Napster was a Pyrrhic victory, that propagated infringement across decentralized, harder-to-detect sites. In the end, the music, movie, and television industries may need a central site like YouTube to prosper just as much as YouTube needs them.
UPDATE: Here’s more evidence to support my theory. Major media corporations are all searching for the “next YouTube.” No one said that about Napster, at least not in a good way.