The problem is one of sharing

Sumner Redstone reveals his core assumptions about Viacom’s posturing with YouTube in a wonderful interview with The Hollywood Reporter. Go read the whole thing, but here are some snippets:

THR: Let’s talk about new media. There are some that say Viacom has missed the boat when it comes to the Web 2.0 revolution.
Redstone: Wait a minute, wait a minute. We don’t miss boats. Other people miss boats, and they may have missed the Viacom boat. The fact of the matter is, without copyright protection, there is no entertainment business. And so we instructed YouTube to remove 100,000 pieces of video from their site. Why? Because they were using it without paying for it. I don’t believe in that. If you want to use us, pay us. Or make a deal with us that is commensurate with the value of our product. We are the only totally content company, and our content has taken years and years to develop, with a lot of hard work. People who want to use it are going to pay us, or good-bye…

THR: Is taking your content off YouTube an indication that you would prefer to do it entirely on your own?
Redstone: I’m ambivalent, but if YouTube would come along and offer us a deal that is commensurate with the value of the programming that we spend so many millions and so much time to create, we would certainly look at that.

These are textbook economic scarcity arguments, and they make complete sense in the mass content distribution world. Redstone is right, then, when he states that without copyright protection, there is no entertainment business. The key assumption here is that control of scarcity is the vehicle for making money. It’s hard to argue with that.

Where things get messy, however, is this statement: “…THEY (emphasis mine) were using it without paying for it.” Here, he refers to YouTube, but the reality is that the “they” actually refers to the users of YouTube, not the company itself. The real matter then is one of sharing clips via a platform that makes it easy to do so. Let me sing an old song: we’ve been sharing copyrighted materials with each other for as long as content companies have been making it available. We swapped 45s with each other when I was a teenager. The first tool to make it easy was audio tape. Then video tape. Then digital. Now, via public platforms.

Each time one of these innovations came along, the copyright industry’s response was to raise prices. Citing losses of sales, $18 CDs were justified along with $10 movie tickets. Never was the pocketbook of the average customer taken into consideration, and if it had been, perhaps we wouldn’t be talking about this stuff today.

Where do you draw the line in all this? If I invite ten friends over to watch a DVD of The Departed, does that constitute theft? How about twenty friends? These are murky legal waters, the waves of which are currently washing over the whole entertainment business.

In Redstone’s interview, he compares the YouTube situation with cable companies that pay Viacom for their content. This seems a logical argument, but it comes from the notion that YouTube — as a company — is controlling the sharing of video clips. That it doesn’t is the monkey wrench in the argument of the content business, and that’s why I think it would be a whole lot smarter for Viacom to work with YouTube than against it.

The negotiations are continuing, I’m sure. Redstone wants a deal that is “commensurate with the value of our product.” The real question is who determines that value?

We must always remember that the Personal Media Revolution is very personal and a very real revolution. Who are people revolting against? It’s a sad business day, indeed, when your customers become your enemy.


  1. Hey Terry — this is a lot like the argument that “If guns kill people, then spoons make people fat.” Redstone’s beef with YouTube is that the site is using Viacom content to drive up their traffic stats. He’s right on that point, but he’s then asking YouTube to police every user to ensure they don’t break the copyright. Let’s kill all the spoon-makers.

  2. I still don’t understand why people like Mr. Redstone think that YouTube is costing them money. I just checked my iTunes receipts, and I’ve spent eighty dollars since Halloween on stuff that I first saw on Youtube. I was exposed to it there, but I wanted to have it when and how I wanted it, so I bought it, and now it’s in my right hip pocket on my beautiful little iPod. Either I am a completely unique anomaly (not likely), or else Youtube is MAKING “content creators” money.

    This genuinely baffles me. If there’s a flaw in my understanding of the situation, I wish someone would explain it to me.

  3. Holly — The difference Redstone would offer is that you saw the product in someone else’s window, then bought it in an authorized store.

    Redstone’s Viacom clips only make him money when people watch them live, where they are embedded along with the ads that pay his bills. If you have access to all of that content without tripping across his ads, you are costing him money.

    Since Viacom is not offering those clips for individual retail sale, you can’t buy them from Redstone and thus compensate the original artists. (Assuming for one moment that artists make as much as producers, agents, and entertainment lawyers.) What Sumner really wants is a licensing for video clips, something like ASCAP or BMI. Those deals allow the radio stations to play the music you listen to “for free.”

    At least, that’s what he would say if he was as clear and concise…

  4. Thanks for explaining, Ike.

  5. I think Sumner would be perfectly happy to make deals with 10 mini-YouTubes. But if VIA, Diller, NBCU et al have to make a deal with one big dog, they’ll be knocked down a few notches on the food chain. That’s why this is a deathmatch.

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