YouTube was the ground zero of new copyright law
Dec 12, 2013
intellectual property rights
YouTube and Google's acquisition revolutionized copyright law, disrupting traditional media and transforming intellectual property rights.
When Google started negotiating to buy YouTube in early 2006, media moguls from all over the world announced that the search giant was about to commit its first big mistake. YouTube's valuation was in the hundred million dollar range and the value would be a burden for the Mountain View company due to the countless lawsuits that would follow the acquisition, with holders of all sorts of digital products demanding compensation for the use of copyrighted content. At the end of the same year, Google paid about 15 times more than the values initially assigned to YouTube. Seven years later, it grossed five times more than the amount paid that year. Thus, the entire rationale behind the logic of copyright in traditional media began to unravel, in a process that is not yet over.
Take a minute to analyze: Google, which was already a titan of technology and the financial world made a bet that was not considered risky - but rather lost by the rest of the industry and today it grosses, after expenses and taxes, the same amount paid in 2006 every year. And this value is expected to continue to grow, albeit at a slower pace than the 58% YOY growth over the past five years. How is it possible that the rest of the industry could have been so wrong?
Part of the answer lies in the entrenchment of reasoning based on the existing media industry. Based on a system that had tight delivery control (it was possible to monitor sales and sales channels), increasing revenue with zero marginal cost and value of copies assigned to the physical object), only Google was able to intuit that the determining system was rotten inside and that a windstorm would bring everything down. Because of this, Google stole most of the advertising revenue from traditional media, turning century-old media groups into dust.
Google and YouTube were the first major parties responsible for voiding the way intellectual property rights were calculated. Music and movies, two formats through which the film and music industries were able to extort oceans of money in the 20th century, became toxic assets in any company's inventory due to the technical inability to control their reproduction.
The same reasoning held true for many years for the software industry, but it had a valuable insight when it realized that code usage was impossible to be "watched" by normal patent law, but the provision of ancillary services along with this software allowed a fairly simple control, through the use of online tools (such as Apple does with iCloud or as Valve does with Steam, or as Sony does with the online community of Playstation). The average ticket of each purchase decreased, but user bases grew astronomically, much more than necessary to keep the industry without risk of bankruptcy.
Music and journalism, however, are still clinging to last century's concepts and cannot find solutions. In fact, these two are not at risk of disappearing. The problem is that newspapers and record labels want to recover the outrageous profits they had when they were the gatekeepers of the entire system, extracting maximum value from each sale. As for that, they can sit and cry because the excesses of yesteryear will never be subsidized with the money of helpless customers.