YouTube and Broadcasting : Threat or Opportunity?

　　 If we were to imagine the future historian who has the task of writing the history of broadcasting for the current period, such a person would be faced with an interesting task.

　　On the one hand broadcasters are moving apace with the roll-out of high-definition digital broadcasting. In less than two years, in February of 2009, analogue television broadcasting in the US is scheduled to close down. True high-definition digital has such resolution that actors are concerned about their wrinkles and blemishes being too apparent.

　　On the other hand, there is YouTube; the online database of 10cm by 12cm heavily pixilated videos with their mono audio tracks. Notwithstanding its low-fidelity that puts YouTube at the polar extreme of high-definition, YouTube has been a phenomenon. In 2006 it was the Time ‘Invention of the Year’. Time explained its choice in these terms:

　　YouTube's creators had stumbled onto the intersection of three revolutions. First, the revolution in video production made possible by cheap camcorders and easy-to-use video software. Second, the social revolution that pundits and analysts have dubbed Web 2.0. It's exemplified by sites like MySpace [&] Wikipedia … — hybrids that are useful Web tools but also thriving communities where people create and share information together. The more people use them, the better they work, and more people use them all the time—a kind of self-stoking mass collaboration that wouldn't have been possible without the Internet. The third revolution is a cultural one. Consumers are impatient with the mainstream media. The idea of a top-down culture, in which talking heads spoon-feed passive spectators ideas about what's happening in the world, is over.

　　In this presentation I am going to attempt to provide an overview of YouTube from a legal perspective. But to do so requires some integration of technological, social and economic perspectives. It also, necessarily, requires situating these perspectives in a predominately US context.

What is it?
　　
　　YouTube is an aggregator of audio-visual content supplied by its registered users. When a user uploads a video to YouTube, it is encoded by YouTube into Flash Video format. The video frame size is reduced and audio is reduced to mono. The audio-visual feed is low fidelity. The video data rate is around .2 megabits per second in the stream. This is a very low data rate for video. Typical VCD rates are around 1 megabits; DVD rates are around 8 megabits; High Definition Video broadcasting is about 20 megabits.

　　However in many ways the success of YouTube relies in part on the low technical quality of the videos. This low quality means that YouTube is not as band-width intensive as it might otherwise be. It delivers reasonably effective video access to very broad range of internet users – including those on less than ideal Internet connections. Therefore, it prioritises ‘sharing’ or ‘dissemination’ over any high quality of the sounds and images made available. And the more there are people able to readily apprehend content, the more there will be people wanting to upload content.

　　Public YouTube content can be freely viewed and copied by anyone. However, it can only be uploaded by registered users. Users are required to provide an email address, but they too are not required to pay. Users are not limited to the number of videos each can upload, and videos may remain on the site for an indeterminate period of time. In general, each upload can be no longer than 10 minutes and/or no larger than 100 megabytes. However, those with ‘director accounts’ (which are also free) can upload longer clips. The content uploaded may range from a straight-out copy of a film or broadcast, a so-called ‘mash-up’ whereby content from more than one source is combined into an integrated experience, or pure user generated content - which ranges from drivel to fascinating.

　　Once uploaded to YouTube, the videos can be viewed from the uploading user’s page, or by searching across key word tags inserted by the user at the time of upload. The uploaded videos can be linked-to, but alternatively, and importantly, every YouTube video can be embedded to be played directly in third party websites. When embedding YouTube videos, third party sites are obliged to provide the YouTube branding as a link to the video’s native site on YouTube.

　　When videos are viewed within YouTube, some form of advertising is rendered, together with other related video content that may be of interest to a viewer. Facilities exist whereby other users can post written comments and reply videos. Videoblogging is also emerging. A form of YouTube online community has been created, and it continues to grow.

　　The YouTube phenomenon has created social issues which themselves have garnered media attention. In Australian schools, for example, YouTube has been banned because it has been used as a vehicle for bullying.

　　From this thumb-nail sketch of YouTube several points can be highlighted:

o YouTube is an aggregator of video content uploaded by internet users
o That video content might be user created or sourced from anywhere
o YouTube’s model makes its priority the broadest possible dissemination
o Low-fidelity rendering which uses as little bandwidth as possible
o The absence of any charge for viewers or users
o Facilitating embedded YouTube videos into third-party websites

　　From its founders’ perspective, this is a model that has been a success. YouTube commenced as a garage start-up in February 2005. In July 2006 the number of videos being viewed on a daily basis on YouTube was reported to hit 100 million. In November 2006 Google acquired YouTube for more than $US1.65 billion.

US Media Interests and YouTube
　　 It is safe to say that YouTube has caused a degree of consternation in traditional media industries. To illustrate this I will offer you an anecdote from an American NBC lawyer about how YouTube ruined her Christmas in 2005. It came to NBC’s attention that a humorous music video called ‘Lazy Sunday’ from two of its Saturday Night Live comedians was a popular clip on YouTube. What to do about it? Was this free advertising for the program and therefore just plain good promotion? Or was it piracy which was taking eyeballs away from the NBC broadcast by serving as a substitute for it? This commercial and legal dilemma within NBC in the Christmas of 2005 sets the scene for much of what has unfolded relating to YouTube in the US over 2006 and to today. The question then, and remains, is YouTube threat or opportunity?, piracy or promotion? Rejecting YouTube overtures for licensing arrangements, early in 2006 NBC issued take-down notices, the nature of which I’ll discuss below, in respect of the ‘Lazy Sunday’ uploads.

　　The legal issues surrounding YouTube can not be understood purely in a legal vacuum. For example, from a commercial perspective, the acquisition of YouTube by Google is central to how traditional media players now view YouTube. Google’s 2006 revenues are over $US 10 billion, and it has been experiencing annual revenue growth of between 70-90%. YouTube is a phenomenon owned by an even bigger phenomenon. Acquisition by Google alone has gone some way to colouring US broadcasters’ response to YouTube. Now it is a serious player, which requires more attention being paid to negotiated solutions and revenue-sharing.

The take-down regime
　　
In general
　　 From a copyright perspective the critical aspect of YouTube is that its content is uploaded by users. YouTube itself is not making the editorial decisions – although it does exercise some censorship controls. For example, YouTube’s terms of use prohibit ‘pornographic’ material, and it polices this rule directly and vigorously. YouTube’s term also prohibit the uploading of material which infringes copyright. If infringing material is uploaded, YouTube under US law is reproducing and performing in public that material, and/or authorizing the infringements of its users. Therefore, one would think that YouTube would police copyright infringement just as vigorously as it does pornography. However the policing of copyright is handled quite differently.

　　YouTube relies on a certain aspect of the US Copyright Act which excludes copyright remedies being awarded against a service provider which stores, at the direction of a user, material on a system controlled or operated by the service provider. This is part of the ‘safe-harbour’ regime, and was introduced into the US Copyright Act in 1998 with the Digital Millennium Copyright Act reforms.

DMCA – 512(c) protection
　　Section 512(c) of the US Copyright Act is directed at online service providers who store information for users for mass distribution to others. A service such as YouTube may fall within the protection of 512(c) if:

• It neither knows nor should know of infringing activity
• It does not obtain a direct financial benefit attributable to the infringing activity
• It responds promptly to a takedown notice given to it by a copyright owner

　　I will return to points one and two a little later when discussing whether YouTube really is eligible for section 512(c) protection.

　　For the moment it is useful to focus the third criterion, which obliges YouTube to promptly remove infringing material after being notified in good faith of its presence by a copyright owner. If a user were to upload an entire Simpsons episode, the copyright owner could send a ‘takedown notice’ to YouTube, which YouTube would have to obey if it wanted to have the exemption from copyright remedies. Compliance with section 512(c) means that YouTube does not have to worry about actively policing user activities. When something is called to its attention, it can then remove the material and rest assured that it would be free from copyright liability.

　　There are two qualifications upon the use of takedown notices.

　　The first makes bad-faith takedown notices unlawful. Section 512(f) is designed to limit takedown notices to those given in good faith. Either the online service provider – that is YouTube in this case – or its uploading user may recover damages if a notice giver knowingly misrepresents material to be infringing.

　　The second enables a contest between the uploading user and the notifying copyright owner. For YouTube to be not liable to an uploading user for taking-down its material, section 512(g) requires that YouTube promptly notifies the user that the material has been taken down. It also provides a measure for an up-loading YouTube user: a ‘counter-notification’. The user can give to YouTube a notice in good faith that his material is not indeed infringing (or more precisely, that it had been targeted as a result of ‘mistake or misidentification’). This counter-notice is designed to be forwarded to the complaining copyright owner and requires the giving of an address for service of legal documents. If it is offered, YouTube must reinstate the material within 14 days from the date of the counter-notification, unless court proceedings have been initiated by the copyright owner. This mechanism effectively removes YouTube from the contest; the dispute becomes one between copyright owner and uploading user.

　　In August of 2006 one of the founders and principals of YouTube expressed the hope that within 6 to 18 months ‘every music video ever created’ would be available on YouTube. No doubt this was said without necessarily thinking of its potential impact on affected copyright owners. Viacom, the owner of MTV, certainly took an interest in YouTube. After a breakdown of negotiations, Viacom issued a takedown notice to YouTube early in 2007 nominating an estimated 100,000 uploaded videos. I will speak later about how Viacom identified the video clips, suffice it is to say a minority of those nominated clips included (erroneously) non-Viacom content. General Counsel for Viacom was reported as saying at the time: ‘YouTube is selling advertising in competition with us, using our own content. This is not a fair business model – for a multi-billion dollar corporation to appropriate material for their own profit’.

　　One thing that is striking from a review of YouTube’s operations is how dependent its business model is on the safe harbour copyright protection of section 512(c). That protection gives YouTube a lot of power in its copyright dealings with traditional media interests – including broadcasters. Section 512(c) severely limits the options of traditional media. Copyright owners can either negotiate non-exclusive revenue sharing agreements with YouTube in relation to user-uploads identified as their content or engage in the ‘after the upload’ takedown notices against YouTube in relation to that content. Both these approaches rely upon technological tools to identify owned content.

　　When writing this paper I suspected that one likely test case to go through the US courts sooner rather than later would be whether YouTube is truly eligible for section 512(c)’s protections under the first two criteria; no knowledge that material is infringing and no direct financial benefit from those infringements. Two days ago my suspicions were realized. Viacom initiated action against YouTube and Google for reproducing and publicly performing Viacom content, and under various US theories of authorisation liability. In describing the basis upon which the first two safe-harbour eligibility criteria are said not to be met by YouTube the Viacom application at paragraph 6 asserts:

　　YouTube has deliberately chosen not to take reasonable precautions to deter the rampant infringement on its site. Because YouTube directly profits from the availability of popular infringing works on its site, it has decided to shift the burden entirely onto copyright owners to monitor the YouTube site on a daily or hourly basis to detect infringing videos and send notices to YouTube demanding that it “take down” the infringing works. In the meantime, YouTube profits handsomely from the presence of the infringing works on its site. And even after it receives a notice from a copyright owner, in many instances the very same infringing video remains on YouTube because it was uploaded by at least one other user, or appears on YouTube again within hours of its removal. YouTube has deliberately chosen this approach because it allows YouTube to profit from infringement while leaving copyright owners insufficient means to prevent it.

　　This might be hotly-contested litigation and if so should result in greater clarity about what is meant by the first two safe-harbour criteria: absence of knowledge and absence of direct financial benefit.

　　Before leaving the section 512 regime, there are two other burdens put on online service providers (such as YouTube) which should be mentioned.

DMCA – Blocking Users – 512(i)
　　 Under section 512(i) there is the global obligation that service providers such as YouTube implement a policy of account termination of these users who a ‘repeat infringers’. Precisely who are ‘repeat infringers’ is unclear. The Congressional House and Senate reports describe ‘repeat infringers’ as those who ‘repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others’. YouTube defines the expression ‘repeat infringer’ for the purposes of its terms of use as ‘a User who has been notified of infringing activity more than twice and/or has had a User Submission removed from the Website more than twice.’ It would seem that several of the users responsible for material the subject of the Viacom take-down notice had their user accounts terminated by YouTube. However, because user registration is free and requires merely an email address, there is nothing that I am aware of which prevents a terminated user from immediately re-registering under a new account name and with a new email address.

DMCA – Revealing Users – 512(h)
　　 Under section 512(h) there is a specific right in copyright owners to issue a subpoena to a service provider for identification of an alleged infringing user. 20th Century Fox served YouTube with such a subpoena in January of this year requesting, that YouTube: ‘disclose information sufficient to identify the [User] so that Fox can stop [the] infringing activity’. In February, YouTube reportedly complied with this demand, presumably giving to Fox the user’s registered name, email address and any retained internet address information. The user in question had, amongst other things, uploaded through YouTube four episodes of the TV series 24 before their premiere on the Fox network.

　　Last week, Magnolia Pictures (which released the Academy Award-nominated documentary Enron: Smartest Guys in the Room) issued a similar subpoena, requesting the identity of a person who had uploaded the first nine minutes of its new motion picture The Host prior to its cinema release. Mark Cuban, a principal and co-founder of Magnolia Pictures, wrote this about Google and YouTube, in his public defence of the decision to issue the subpoena: ‘Google could be a good corporate citizen and make sure they have permission from the copyright owner before a video is posted. Instead they have become the bully on the block. They feel they have the legal right to tell every person who makes a living based on their creative efforts that they have to do business the Gootube [sic] way …’ This returns us to my earlier point – service providers such as YouTube are in this position of relative power against copyright owners because of the indemnity provided in US copyright law by the safe harbour regime.

Technological approaches
　　Given that that US safe harbour facilitates exploitations of Internet technologies such as YouTube, copyright owners are forced to look to particular technological measures to reassert power. While copy protection might be applicable for many copyright owners, for free-to-air broadcasters copy protection solutions are likely to be problematic. This is because today, whether by levy system or fair use exception, the freedom of citizens to make private use copies of broadcasts has emerged as an international norm.

　　Therefore I will look at four other technological responses suggested or implemented to date.

DRM marking
　　 Digital watermarking embeds a unique identifier (such as the International Standard Audio-Visual Number or ISAN) and other digital rights management information throughout the audio-visual content. This information is invisible to the human eye but readable by a decoder. Developers of watermarking (in particular Philips and Macrovision) explain that marking remains recognizable in subsequent digital and analog copies because it is part of the video or audio track. Among other things, the unique identifier should permit the copyright owner to ascertain what of its content is being made available on the Internet. The widespread adoption of such technologies would better enable copyright owners to insist that entities such as YouTube implement more effective filtering. For example, a database of program episodes identified by ISAN could be provided to YouTube and it could be required to filter out those programs under certain conditions, or to enter revenue-sharing licence agreements in respect of those works.

Finger-printing
　　 The problem created by the absence of effective audio-visual marking can be illustrated by the less refined filtering solution that YouTube has already agreed upon with some record companies, namely, acoustic finger printing. This uses the proprietary Audible Magic technology which analyses the actual files uploaded. In order to determine whether the content contains a designated musical work, the Audible Magic solution examines a small portion of the file content, extracting an acoustic fingerprint. This fingerprint is then matched against the fingerprints of designated musical works in a pre-compiled database.

　　Last year, Warner entered into an agreement with YouTube which licensed its users to ‘mash-up’ video clips with soundtracks that use music from the Warner catalogue. For example, home-made videos of amateurs’ lip syncing or dancing to popular songs. The agreement obliged YouTube to use the Audible Magic system to identify such videos and give Warner a share of the revenue for any advertisements that appear alongside these videos, if Warner chose that rather than electing to have the videos removed.

　　The recently-filed Viacom complaint includes a very telling paragraph on the selective use of filtering technologies by YouTube. As part of its attack on YouTube’s failure to meet the lack of knowledge criteria for safe-harbour protection, Viacom makes the following observation:

　　YouTube has deliberately withheld the application of available copyright protection measures in order to coerce rights holders to grant it licenses on favorable terms. YouTube’s chief executive and cofounder Chad Hurley was quoted in the New York Times on February 3, 2007, as saying that YouTube has agreed to use filtering technology “to identify and possibly remove copyrighted material,” but only after YouTube obtains a license from the copyright owner … Those who refuse to be coerced are subjected to continuing infringement.

　　Implicit in this is that YouTube’s posture in negotiations reveals it to have full knowledge of infringing material. On this view, rather than deny its existence YouTube uses it as a weapon, saying effectively: ‘we will only filter it out if you first come to licence terms with us’.

　　That said, it is unclear that the Audible Magic solution used for the music industry is necessarily the technical solution for television broadcasters and other audio-visual rights holders. The complexity of use of audio-visual material on YouTube (such as ‘mash-ups) makes taking a single audio-fingerprint of a file a seemingly ineffective identification means.

Keyword searching
　　 The Viacom take down notice was compiled using text-based keyword search technology of a firm called Bay TSP. This is a pragmatic approach to the identification of content which relies upon how the uploading user has described the material. However of its very nature, and as noted earlier, it may incidentally (and erroneously) identify material not within the repertoire of the rights holder.

　　The Electronic Frontier Foundation (‘EFF’) is a US-based non-government organization whose slogan dedicates it to ‘defending freedom in the digital world’. The EFF philosophy entails, that as a matter of public policy, copyright should always yield to technology. Therefore unsurprisingly, the EFF was concerned about the video clips targeted erroneously by the Viacom take-down notice. This is the EFF’s YouTube video response, seeking to whip up user-action.

　　If nothing else this EFF propaganda provides yet another illustration of how political copyright can be in a digital world.

Broadcast flag
　　 Finally there is the specifically law backed solution of the broadcast flag. In this talk it is not possible to go into detail about broadcast flags. Such regimes rely upon the mandating in public law of reception hardware compliance with an instruction embedded in digital broadcasts – the so-called ‘flag’. Once flagged broadcasts are transmitted into a world of flag-compliant devices, there is no easy way that digital broadcast content per se can be made available on the Internet by an ordinary citizen. While an ordinary citizen may copy the broadcast, all his receiver hardware will deny him the ability to output the broadcast in a digital format suitable for Internet redistribution.

　　An attempt in the US by the Federal Communication Commission in 2005 to implement a flag regime was ruled ultra vires by a court. Lobbying for legislative reform to enable implementation has stalled, and it is not likely to occur any time in the next two years in the US.

Commercial approaches
　　After all this it might come as a surprise to you that two US broadcasters, CBS and NBC, have official presence on YouTube. Through this they have made available some of their programming – typically of a promotional nature. This is in addition to the broadcasters themselves making some of their content available on their own websites.

　　Perhaps of greater surprise is the commercial relationship between YouTube and CBS. In October 2006 an agreement was struck to make some CBS content available on YouTube, in exchange for a share of advertising revenue. Last month the Wall Street Journal reported that CBS and YouTube were discussing:

　　A multiyear deal to let YouTube users watch clips from CBS shows such as The Late Show with David Letterman and CSI, and even to splice those snippets into homemade videos …. Under the deal, Google would have guaranteed ad revenue of more than $500 million for CBS ….

　　However no agreement on this broader deal was reached. The report indicated that a sticking point was ‘how long the deal would run’.

　　Viacom, prior to issuing its takedown notice, had also entered into negotiations with YouTube to attempt to reach a non-exclusive revenue-sharing licence. Again, the Wall Street Journal reported that shortly after Google’s acquisition of YouTube, Google suggested in negotiations with Viacom that:

　　Google might be willing to guarantee as much as $500 million in ad revenue over several years to licence Viacom [content] ... Under the terms discussed, Google would pay Viacom about 70 percent of any advertising revenue generated by Google from Viacom's videos … In exchange, Viacom would agree not to sue Google over copyright issues.

　　The Wall Street Journal reported that negotiations broke down after Viacom raised as preliminary issues such matters as control of advertising sales and the technology employed to identify content. Viacom instead entered into a content agreement with a start-up rival Internet video service – Joost – and issued the takedown notice against YouTube.

　　To reiterate my earlier point, in their dealings with YouTube US broadcasters are at a serious legal disadvantage. If YouTube can validly dock itself in the safety of the section 512(c) copyright immunity – the very thing that the recent Viacom action seeks to determine – the best that broadcasters can do is to issue takedown notices and subpoenas. They can not bring YouTube to heel by threatening statutory damages or a permanent injunction. At the same time, now as a part of the Google empire, YouTube seems to present possible opportunities for broad, non-exclusive licences from broadcasters. However a real road-block to those opportunities is the lack of implemented identification technologies for audio-visual content.

Conclusion
　　That just about concludes my presentation. There is no reason why commercial terms between audio-visual rights holders (including broadcasters) and YouTube can not be reached. There are many reasons why they should be reached, including the mere fact that a public site like YouTube is more palatable than driving activities underground to the murky world of peer-to-peer file sharing. However, there are also major barriers to collaboration. YouTube itself has no exclusivity. The flash video file rendering technology happed to be a ‘killer app’, but there is nothing to prevent other similar and better services to emerge. I have mentioned Joost. Another is Veoh, which also has the backing of mainstream media industries. And if YouTube qualifies, every new service that emerges will also qualify for the safe harbour of section 512(c). YouTube is not in itself a threat or an opportunity. It is merely the first illustration of a new environment for all those in the audio-visual industries.

　　Therefore, as will be apparent from what I have already said, it seems to me that audio-visual industries should be very well motivated to arrive at international standards for embedding unique digital markers in their content. In my opinion it offers to rights holders a key strategy for dealing with YouTube and its progeny. This is because the mainstream roll out of this technology does two things.

　　First, it affects what a service like YouTube ‘should know’ about the infringing status of any upload. You will recall that under the provisions, an online service provider is ineligible for the safe harbour if it either knows or ‘should know’ of the infringing activity. If, say, a broadcaster gave to YouTube a list of unique embedded identifiers of its content, and ensures that YouTube has the technical means to easily read those identifiers in uploaded content, arguably YouTube ‘should know’ that the material is being uploaded by a user in infringement of copyright. If so, this alone may disentitle YouTube to the protections of the safe harbour.

　　Second, if commercial agreements are arrived at, such embedded markers should enable correct identification of an owner’s licensed content hat has been uploaded to YouTube. In turn, this will better facilitate estimating the value of the use of that content in the hands of YouTube, and therefore the calculation of appropriate revenue splits.

　　YouTube: threat or opportunity? Obviously it is both, and the current legal settings in the US in some ways make YouTube more threatening than it would otherwise be. However, as we have been saying in copyright circles for many years, from a rights holder’s perspective the answer to the technology, is, technology. In the current environment it seems to me that the best protection audio-visual producers have in dealing with the YouTube model is the ready and reliable identification of what is theirs.

(A presentation at the Asia-Pacific Broadcasting Union Copyright Seminar held in Tokyo on 15 March 2007)