How does Youtube do it?

Surely you’ve wondered how Youtube a)makes money and b)avoids copyright infringement disputes.

I’ve finally figured out what’s going on thanks to Fred Von Lohmann’s editorial:

YouTube and its users may have a number of good copyright defenses. In my opinion, most of this video-sharing should qualify as fair use — after all, this is noncommercial activity (at least for the end-users), and a company like UMG may have a hard time proving that there is a realistic licensing market for amateur lip-sync videos shot by 14-year-old girls.

Finally, because its systems are largely automated, it may be that YouTube simply hasn’t engaged in the necessary “volitional act” to cross into the realm of copyright infringement. (See CoStar v. Loopnet, 373 F.3d 544 (4th Cir. 2004) for a similar circumstance where an Internet hosting service was let off the hook.)

But outside of law school exams, we’re not likely to see these difficult questions resolved because neither YouTube nor its audience can afford a courthouse showdown over every 3-minute homemade music video.

I’m not sure this offers the blanket protections von Lohmann envisions. What if every day there were 50,000 uploads onto Youtube of the latest Lost episodes? It suggests to me that the Safe Harbor protections of DCMA could be weakened (much as I hate to imagine that) or that a pattern of infringement over time could produce inducement (and I think media companies could easily calculate how much ad revenue they are losing whenever YouTube features a bootleg copy.

So far advertisements have not been placed on video pages, but look at this page. I’m guessing Fatboy Slim is a media property owned by Universal or at least a major label (sorry, I couldn’t sort through this). But on this page we have (at least when I was viewing it) advertisements for NBC’s My Name is Earl and The Office (NBC = Universal Music, if you didn’t know). In other words, YouTube is brokering some kind of deal with media companies to swap indemnity in exchange for a certain amount of free/discounted advertising. That probably underlies the recent deal with Warner Music as well.

Music videos are a no brainer to bargain, because they are short and promotional in nature. But with 20 or 30 minute shows,  they are produced primarily for the commercials. Also, how does YouTube ensure that infringing videos use the right kind of ad? Perhaps they would offer a bounty to youtube surfers who find ads owned by a major media company (out of which the bounty hunter could take a percentage). The problem is: what if one of the major media companies decides not to play along (like Fox).  Can they aggregate multiple instances of copyright violation into one lawsuit?