Tuesday, March 20, 2007

Viacom vs. Umair Haque : Umair gets it so wrong (again)

The news that Viacom is suing Google for copyright infringement is no surprise for those who understand basic Ricardian corn law economics or simple property rights, the things that underpin the civil society as we know it.

Viacom owns the unique resource - the entertaining content people log on to YouTube to watch - and content servers like Google cannot live without that kind of attraction. Google's entire business is based on the ability to find the quality needle in the mainstream haystack, sift the good from the mediocre, deliver it to your desktop - and then subtly monetize it. Is it then any surprise that copyright holders object to Google piggybacking for free on their assets to make serious money?

Don Dodge understands this, and so do many other publishing copyright holders, who are queueing up to sue Google. Even Steve Ballmer gets it:

"Is there a business model? Right now, there's no business model for YouTube that would justify $1.6 billion. And what about the rights holders? At the end of the day, a lot of the content that's up there is owned by somebody else.The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google."

You know something is rummy when you find yourself agreeing with Microsoft's cheerleader-in-chief. Steve has an axe to grind, but on the principle, he's right: it's like I own a house, and those boys and girls from Google set up a stall outside and decide to rent out rooms in the house to tourists, but without paying me - or even asking me for permission. And they tell me "don't worry, it's for your own good really, rents will rise and there will be more renters in the long run". Oh. OK. That makes sense. Thanks, Googleers.

Duh!

Once again that shamen for hair-brained ├╝ber-economics, Umair Haque, is tilting at bogus windmills, pretending that the fundamental industry shift is deeper. But the fact is that YouTube is Napster for video, and unless they pay those copyright holders for their content, they are going to find themselves on skid row, just like Napster.

Dave Ricardo rocks.

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