– Thoughts on Strategy and Management

The end of videoportals ?

Today a very interesting article concerning youtube and copyright issues could be found in the German newspaper “Handelsblatt”. The headline was that the American sport league attacks Google due to various violations of their copyrights. That is a very interesting development for all videoportals, no matter whether they are in USA or in Germany.

In fact videoportals like YouTube, clipfish and myvideo have become very popular in the last year. They actually present a major part or trend of that what we call “Web 2.0 ” today. But we have to consider that the huge success has a “dark side”.

Why? Go to one of these portals and check them out for your favourite tv show or music video. Check for your most favourite actress and you will find….a huge number of videos related to them. Some of them might be recorded on private occasions, but most of them will represent a copyright violation to a certain degree. That is a very conserative formulation, since some clips contain 2 violations (pictures and sound) at the same time. I have to be fair, some of this clips are really masterpieces of art and demonstrate the effort and enthusiasm of their editors. I LIKE THESE VIDEOCLIPS….

Most interesting is that actually the “copyright empire” strikes back with this power now. As long as the videoportals did not look like big business the situation was accepted: users uploaded 70.000 clips PER DAY and Youtube/Google deleted some of them (News Corp. has forced Google to delete 30.000 clips; 23 firms from Nippon requested to delete 30.000 clips). (I have to mention this: Before the acquisition of YouTube, Google made agreements with Universal, Sony / BMG and Time Warner. However there are still hundreds of other small labels and movie makers left.)

But now we have reached a new business level. Videoportals have become able to generate cash flows and therefore everyone in the business will have his stake. Welcome to Web 3.0! Two options will remain:

  • A general agreement between videoportals and copyright holders. Hence the portals will pay some kind of flat licenses fees on an medium level of violations that is caculated on a statistical fundament. A manuell and exact tracking of copyright violations will not possible due to the huge number of uploads. I can also not imagine to check incoming clips: How will you decide about a video clip from a foreign country, whether you have a copyright problem or not?
  • An agreement can not be achieved. Hence the videoportals face a massive number of legal attacks and decide to leave this business

Most interesting is that you can compare the situation with the end of web 1.0. Last time (2001) the venture capital firms and their start ups went out of money. It is possible that we will see a lack of licences and copyrights this time.

But in case of the latter option nobody would gain revenues. Hence I would expect that we end up with a new business concept:

  • User are allowed to download what they want (That might include clips with copyright violations.)
  • Viewers also pay a low monthly fee for getting access to the clips. Viewers can reduce their fees by uploading clips which are rated by the community. A better rating means reducing your fee.
  • The portal runs a statistical analysis to identify all violations. This result is the fundament for the portal fee.

Web 2.0? No, it is just Business 2.0.

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