What do you expect MySpace to do? (II)

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Universal is now suing MySpace for copyright infringement:
Universal contends that much of the media posted by users of MySpace is not user-generated at all, but actually music and videos stolen from copyright owners.

"MySpace is a willing partner in that theft," the lawsuit claims.

In the complaint, Universal singles out features on the Web site that enable users to save copies of videos to their profile pages or share them with others on the site. Universal Music also claims the MySpace Video and MySpace Music services also enable users to access copyright material without permission.

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In response to the lawsuit, MySpace issued a statement saying it is in full compliance with copyright laws and is confident it will prevail in court.

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Earlier Friday, MySpace said it was testing technology aimed at enabling copyright holders to flag user-posted videos on the site that they find contain unauthorized copyright material. The flagged content is then removed by MySpace. The company expects to roll out the feature in a few weeks.

Currently, MySpace takes down content from its users' pages when it receives a notice from a copyright holder.

Last month, MySpace began using "audio fingerprinting" technology to block users from uploading copyright music to the site. That technology works by checking audio files against a music database from Gracenote Inc.

I think you can imagine two types of accusations against MySpace. First, you could say that they're not doing enough technically. I'm not convinced that's true. MySpace (and YouTube, etc.) are basically big, semi-structured file sharing sites. Users upload content and MySpace (or YouTube) distributes it. As I observed about YouTube, there's no really practical way for MySpace to determine that a given piece of content is unauthorized or not—though of course there are not-very-good ways to determine whether it matches some subset of the very popular stuff for which databases sort of exist. Based on what MySpace claims to be doing, it sounds like the techniques they're using are more or less the state of the art. It's just that the state of the art isn't very good. The only real way to stop widespread sharing of unauthorized content is to block all content by default.

That leaves us with the second accusation, namely that MySpace is profiting from the posting of unauthorized copyrighted content, and perhaps tacitly encouraging it. Certainly, any generic filesharing service is usable for sharing such content and it's no doubt a fair part of MySpace's value proposition, as it has been for YouTube. However, it's also clear that there's a real demand for distributing user-generated content and many of the net-fad YouTube videos (The Evolution of Dance, Ask a Ninja, Will it Blend?, etc.) appear to be completely original. So, this isn't a situation like Napster where it's clear that the primary reason for the system is to pirate content, but that doesn't mean that they're not deriving value from unauthorized copying.

MySpace is different from YouTube in one important respect; it's owned by a media organization. So, does it do a better job of protecting its own content than it does of other people's content? If so, this would be evidence for UMG's case. If not, that seems like a pretty good argument that they've reached a reasonable balance point.

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Universal's position regarding third-party sites hosting and distributing their content isn't really "don't do that." It's "pay us for the privilege, or get sued."

There are two main kinds of Universal content on MySpace: video and music. News Corp, as a media company, generates a lot of video, but little if any music.

With respect to video, the fact that MySpace gives Fox and Universal videos an equal level of protection (measured by takedown rates or something similar) doesn't necessarily mean anything. Internal accounting might let Fox lose $Xm by having its own videos on MySpace, but gain more in MySpace-related profits. Even at the same takedown rate, Universal might lose a proportional $Ym, which they will expect MySpace to pay back.

Recorded music, including its use as a video soundtrack, is another issue. (Mark Cuban pointed out this problem for YouTube back in September.) Far from being wholly original, the "Evolution of Dance" video uses clips from over 30 songs. User-created videos with unlicensed music added as a soundtrack are extremely common.

The best result for Universal would not be to take all of its music off of MySpace, but to get paid a royalty for the estimated amount of Universal music posted by users to the site. The technical difficulty of finding and removing songs might actually argue for that solution.

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