When Google bought Youtube for 1.6 billion last year they effectively allocated $400 million of the purchase price towards lawsuits they felt were coming down the pike. Although both the purchase price and that extraordinary “copyright payoff” of 400 million seemed extraordinary at the time, Eric Schmidt and the Google boys may be wishing they’d allocated a few more bucks to stave off the copyright violation bandwagon, which today solidly topped YouTube’s 1.6 billion price by about 179 million dollars.
Viacom is suing Google for a billion already, and today Mediaset joined the fun with a 500 million Euro ($779 million US) lawsuit. Interestingly, Mediaset is controlled by a company owned by Italian Prime Minister Sylvio Burlusconi, so the case will likely become fairly high profile in Europe.
So, assuming YouTube is worth the $1.6 billion Google ponied up for the big show, they’ve got to be more than a little concerned that the legal onslaught has only just begun but already is approaching 2 billion. Obviously neither Viacom or Mediaset expects a full payout but you can be sure many, many others will follow for two important reasons:
1) Google’s got the money. Deep pockets are a *very* attractive stylin’ feature these days and despite some stock price setbacks Google is still sitting pretty pretty in terms of cash and revenue prospects.
2) Videos don’t got the money. Monetizing video remains one of the most problematic features of the online world, and it’s becoming clear that no “magic bullet” is out there. I’ve written for some time that video will not monetize well and I think the jury (that would be millions of us out there in online land) is almost in with the verdict that video simpy will not pay distributors nearly as well or serve advertisers nearly as well as pay per click which remains the most lucrative and effective form of online advertising – probably of any paid advertising for that matter.