(Author’s note:  In this article, I get to use one of my favorite theories:  The Sergeant Schulz Theory.  Read on.  Also, I posted this initially at Tubefilter.tv.)

By now you probably know that Google won the most recent round of its legal battle with Viacom (which initially sued YouTube, now owned by Google).  A federal district court judge in New York issued a summary judgment that dismisses the $1 billion claim of infringement against postings on YouTube that were, in the opinion of Viacom, infringing on their copyrights.  It’s an opinion worth reading. [LINK HERE.]  If you are a legal wonk, then you will appreciate the succinct manner in which Judge Stanton weaves together the holdings of previous DMCA cases. (Here’s a hint: The Coase Theorem.)

The judge bought the argument that Google made—namely, that it was protected under the “Safe Harbor” provisions of the Digital Millennium Copyright Act from the copyright infringement claims made by Viacom.  More important, Judge Stanton said that YouTube’s actions demonstrated that the “takedown” provisions in the DMCA actually worked.  (Those provisions enable copyright holder to require that copyrighted material to be removed from public view.)

There are some unintended consequences (the Sergeant Schulz Theory) that may arise from this opinion, but they are likely to be acceptable for the time being.

It is not over yet.  Viacom has vowed to appeal the decision.

So What?

In a nutshell:

The burden of policing copyright infringement now squarely sits on the shoulders of the copyright owner (or the one with the rights).

With a little more detail:

  • The Safe Harbor Is Open. The DMCA safe harbor provisions are available for certain types of companies if they have and actually use the takedown provisions of the DMCA.
  • You Are Your Own Policeman. If you own (or hold rights in) a copyright, then you are responsible for policing the use of that copyright by others.

The Details

Let’s go a bit deeper in what the opinion means.  The merits of the positions of either side are not relevant here.  What is relevant is what the opinion means to players in the digital content space.

1.         Companies like Google Have a Safe Harbor. Companies that post digital content can rely on the “Safe Harbor” provisions of the DMCA when that content is posted, provided that they are serious about taking down content that may be infringing (more on that point below).  This holding is important because there was some confusion as to whether or not a company like Google was actually permitted entry to that harbor.  One view of the DMCA provisions holds that it applies almost exclusively to ISPs, but this view now appears to carry little weight in the federal courts.  Getting there was not without some abstruse legal reasoning to adapt the language of a statute written before places like YouTube existed, but it is probably solidly established by the various legal opinions on this point.

But be careful: It is not clear what sites would have this protection.  Google made the (winning) argument that, in essence, it was just providing transmission, storage and indexing of the content—sort of like an ISP.  Another UGC site might not be so lucky.  For sites that aggregate content from other sources, this opinion may incrementally strengthen their position, but they would have to fight holdings going the other way in other courts.

2. The Safe Harbor Has Some Rules. Judge Stanton emphasize that the takedown procedures worked in this case.  YouTube immediately responded to Viacom’s takedown notice:  Within 24 hours of receiving the notice, YouTube removed almost all of the more than 100,000 clips that Viacom claimed were infringing.

So the implication is clear for companies posting digital content: The Safe Harbor is available if and only if your takedown procedure actually works.

3.         Red Flags and Knowledge. The opinion also turned on the “red flags” of infringement that would be enough for YouTube to take down allegedly infringing content.  It gets complicated but Judge Stanton accepted (and essentially paraphrased) Google’s argument in its court filings that there was no practical way to check every posting for infringement.  The opinion essentially holds that a company in the position of Google’s YouTube basically has to have notice or actual knowledge of infringement of specific content.  Although the judge did not say it, the standard for actual knowledge would be, say, that Eric Schmidt (head of Google) went to the YouTube site and watched Iron Man the day after it was relased.

So the rule is: If you receive a takedown notice about specific content or if you have a really, really good reason to believe that it is infringing, then take it down.  Immediately. Then you’ll be OK.  (True, taking something down can cause other problems but that’s outside of the scope of this article.)

4.         Unintended Consequences:  The Sergeant Schulz Theory. Remember Sergeant Schulz on the TV show, Hogan’s Heroes?  He knew nuzzeen, he saw nuzzeen and that way he did not get in trouble with his superior.  Think about it for a moment:  If the opinion says that if you don’t know about the infringement then you don’t have liability.  Therefore, if you don’t try to find out if something is infringing, then you’ll be OK.  By definition, you see nuzzeen if you don’t look too hard.  And so you won’t.

5.         For Copyright Owners: Spend All Your Time Scouring the ‘Net. The implication of the opinion is that copyright owners (or the rightsholders) must now police the use of their copyrights.  Their first remedy for companies sitting in the position of Google’s YouTube is the “takedown” procedure specified in the DMCA.  It’s a clunky system, to be sure, but it is pretty much all you have.  Moreover, other recent opinions are now shifting the burden of policing the use of IP rights to those who hold such rights.

There is some hope.  First, as noted above, it is not clear that all sites can avail themselves of the Safe Harbor provisions.  For example, one could argue that Facebook would not qualify (a tall order).  However, the burden of proof now probably rests with the plaintiff and judges now have a well-reasoned (though not necessarily correct) opinion on which to rely.

Second, the holding now opens up opportunities for companies (say, startups) to create Internet policing services.  Whether they are automated (think “watermark”), manual (think outsourcing to foreign countries) or a combination, there is now a market opportunity.  There are already several such services out there.  They aren’t foolproof but they are good.

To close, the decision is not exactly binding on anyone except those within the district of the New York court.  Plus, Viacom’s vow of an appeal makes the permanence of the holding somewhat uncertain.  Both of these points are largely legalistic, because the opinion, as it now stands, will be used as an important bulwark of any argument in court by a defendant to a claim of infringement.  The bottom line:  Assume it applies.

Summary:  The Tribune Company just launched Tribune 365 (www.trb365.com) that claims to provide integrated marketing campaigns—that is, ads across multiple platforms available within the Tribune media—newspapers (e.g., The Chicago Tribune and The Los Angeles Times), other print outlets and television stations.  In fact—and probably more important—it represents integrated ad sales:  one team to sell ad inventory across all of their platforms (and, with hope, others, as well).  We think this is a brilliant step—and long, long overdue.

The Details.

It is pretty straightforward—and both astonishing and understandable (OK, OK, so it’s a contradiction:  Call it a paradox)—that a major, and heavily indebted, media company has finally figured out one of their biggest assets:  multiple platforms.  The Tribune Company’s initiative is called Tribune 365 (www.trb365.com).

Selling ads across these platforms to an advertiser in what the ad industry calls “integrated ad campaigns” becomes a lot more attractive.  More to the point, they overcame one of the biggest obstacles, which is the silo-like ad sales structures of newspaper ad teams selling their ads, TV station ad sales teams selling their inventory, and so on.  Media reports point to a recent campaign for Target, with ads in newspapers, on Tribune TV stations and Tribune websites.

So What?

“Integrated ad campaigns” are not that new but what is new is that they are now available where they count:  where the inventory resides.  This makes it likely that we will see them with more frequency.  Moreover, think about it for a bit:  What the Tribune is doing is a classic case of the model that like very much, which is “audience integration.”  That’s what diversified media companies do best.  They bring audiences to advertisers.  The more diversified they are then the more audiences they can aggregate.

Aggregation recognizes that audiences get their content from multiple sources.  While there may be some overlap (someone who reads “The Trib” and watches a Tribune TV station), there are many people who use one medium and not another.  If those media happen to be owned by one media company, why not place ads across all of them?  That’s audience aggregation.

It’s not always so simple.  We have often seen civil war break out in media companies among the ad sales teams.  The sales team responsible for TV ad sales rebels when the website sales team for the TV station calls on the same clients for their inventory.  It can get ugly.

And it is understandable, because you are dealing with the livelihood of salespeople.  Someone who has cultivated the ad agency (or internal ad buyer) of a large advertiser for years relies upon the sales commission to pay the mortgage .  Why should he or she let a competitor—even someone in the same corporate family—put the saleperson in financial jeopardy?

And (we hope) that’s what the Tribune Company has figured out.  We hope that the integrated sales team means that commissions are not limited to one medium because that is the only way that you can (and should) change the ad sales culture.  After all, ad revenues amount to the lifeblood of most media companies.  And selling ad inventory makes that lifeblood pump.  And earning those commissions is what enables the sale of that inventory.

Twitter on TV

July 2009

Summary:        Now we have a new form of convergence:  social networking and (cable) TV.  Not a bad move.  Verizon announced two new “products” in its “social TV” initiative.  One is a set of widgets that enable viewers to connect with other viewers through various social networks—while watching TV.  The second enables viewers to watch user-generated content from certain websites.  One more step in convergence.  Of course, it is a bit like the Zeno’s Paradox of digital convergence.  You could also say:  It’s about time.

Through its FIOS TV service Verizon is taking a few bold steps towards digital convergence.  First, Verizon will create an application store with widgets developed together with some notable social networks—Twitter, Facebook, Veoh and a few others.  So, a FIOS subscriber can follow tweets they select from a list—including the programming they are watching.  They can log into Facebook (but not yet Twitter) to update their profile as to what they are watching at that moment.  An SDK will be launched soon.

The second new product permits a subset of subscribers to start searching and viewing UGC from certain video sites, including Veoh and Blip.TV.

So What?

Well, it is another step closer to digital convergence.  Using TV programs to tweet is an obvious stimulus to that convergence, when you consider how often TV shows are the subject of tweets.  Tweeting about these programs is of course nothing new and these widgets do not (yet) enable tweeting through the TV.  What it does permit is to enable a viewer to see whose twitting what and when.

So that’s why it’s like Zeno’s Paradox.  Remember:  Walk halfway across the room, the half the remaining distance, then half the remaining distance—and so forth.  This is a little like that:  closer, closer, closer, but not quite there.

But the move is just the first and we can expect more.  The application store will propel developers to pay attention to crossing the chasm between the TV, the PC and the mobile phone.  Think about it:  Twitter is (largely) phone-based and Facebook is (largely) PC-based-platform.  This appeals to the developers.  FIOS competitors will figure out their own way to merge social networks with TV programming.

OK, now the gears are churning.  Think of characters using Twitter in the programs—and they are matched by Twitters available to FIOS users.  And so forth.

Stay tuned.

Summary:  Taking a page from websites, networks and cable channels have introduced “TV in Context,” with ads that are “contextual” in the sense that they are tailored to a particular moment or scene in a given show.

Cable channels and networks have expanded their program, “TV in Context,” of placing ads in TV shows and movies that play off a particular scene in a scripted series of a movie.  For example, just after a crash scene in the Bourne Supremacy, an ad for the in-car service OnStar said “Are you counting on your cellphone to be your lifeline in a car crash?”  (See the New York Times article http://www.nytimes.com/2009/05/20/business/media/20adco.html?fta=y.

What is surprising is that it has taken networks (and cable channels) so long to get here.  For decades, advertisers have made sure that their ads are not placed in the wrong place—e.g., an ad for a Chevrolet just after a fatal car accident occurs in a TV series in which a GM car is involved.  And this is innovation?

One more step towards true convergence:

The Open Mobile Video Coalition (OMVC) has announced plans for 60+ stations in 20+ cities to start simulcasts of OTA programming by the end of 09. Cities scheduled thus far include New York, Boston, Chicago, San Francisco, DC and Philadelphia.

This should boost sales of the iPhone and other devices with large screens. Imagine the opportunity now with WiMax being deployed—conversely, imagine the network overload.