Is suing everybody necessary?

Posted: March 13, 2007 in Uncategorized
Another day, another billion-dollar lawsuit. To be fair, almost everyone painted a target on Google’s back when the rumors began they would buy YouTube…we all knew nobody would sue YouTube unless there was some money in it, and they had no real money. It was a lesson learned (and not learned) by the RIAA when they spent a year destroying Napster and got bupkis for it (except for their record sales year…more on that later). Hmmm, now how can the RIAA get some money out of illegal trading of songs…oh yeah, demand ISPs to give up the names and mailing addresses of their customers, then blackmail those sinners for $3000 each to stay out of a potential $150K lawsuit. But Viacom threatening lawsuits against individuals won’t work at all for the Google situation.
 
Viacom paints YouTube as the online video version of the devil. CBS believes YouTube is a beneficial promotional tool, which is actually a more correct description…for example, I never watched the Colbert Report until I saw a recommended snippet on YouTube, now I watch it semi-regularly. Oops…I just realized CBS didn’t benefit from my viewership due to YouTube, it was Viacom. My bad.
 
This is basically Napster deja-vu. Here’s how it happened back then:
 
Album sales in the late-90s were in a slump, primarily because record companies thought rock (or grunge, whatever) wouldn’t be as big of sellers as "Boy Bands" and "Girl Bands"…so their money went the wrong way promoting flash-in-the-pan acts trying to find the next N’Sync or whatever. They were also actively trying to kill vinyl. Napster was a very popular song trading network, but most of the world didn’t know about it…until December of 1999 that is, when the RIAA made Napster mega-famous by leveling a lawsuit at them. Over the next 10 months you could not go for two days without hearing about the lawsuit in the news. "Free music! Wow! I’m getting broadband!" said all the little thieving munchkins. An overnight sensation that is, even today, unequaled in the Internet Age….Napster went from tens of thousands of regular users to tens of millions within a couple of months. The lawsuit was a billion-dollar advertising promotion for Napster…free of charge.
 
Then in April of 2000 the hammer fell on Microsoft: the next day of stock trading saw a massive 15% drop across the board, which analysts called "a market adjustment"…little did they know that it was only the beginning of a downward spiral. F***edcompany.com detailed chapter 11 and chapter 13 filings on a daily basis, and we watched hundreds of thousands of people in the U.S. lose their jobs. The government was publicly using the word "recession" by August. Sales analysts predicted a very dismal Christmas season. And in September a federal judge ordered Napster servers to be shut down.
 
January financial reports were in the tank: every corporation was apologizing to their share holders for 2000, and blaming the recession (or the depression in the Far East) as the reason they lost their shirts that year. Then came the numbers from the main body of the recording industy: they reported a record 7% increase in revenue over the previous year, which was very close to a billion dollars more revenue than they took in for 1999. How is this possible, when every other industry bled money? That’s easy: it was Napster. People would download a crappy 128 bitrate song, and then buy an album (for fidelity, playing in their car or home stereo, etc). Every person I ever asked said they purchased music after hearing a sample on the ‘net. It was the biggest jump in yearly album sales revenue since 1981 (that’s when MTV went live, if you all remember). And 2001 saw a 6% decrease in album sales revenue over the previous year…which, of course, the recording industry blamed on song trading, but no one used Napster over that entire year, and other file trading software was too difficult to use for most people that found Napster so easy and simplistic.
 
The RIAA bit the hand that fed them.
 
Now we have Viacom. They have the opportunity to utilize YouTube to not only promote their programming, but also have a vast, untapped resource: their viewers opinion. They would know implicitly how successful a show is by the number of views of a particular snippet, and the comments would shed light on how much people liked something, giving them not just a marketing tool, but a way to anticipate what people want to see on TV…and then come up with new shows accordingly. Conversely, they would also know which shows bombed by lack of snippets, or negative feedback from viewers. And this lawsuit will give YouTube tons of free advertising, driving even millions more to their site! Think about it: Viacom knows they have lost a massive amount of their audience to the computer (gaming, web surfing, instant messaging, etc), and now they can use the computer to get some of them back.
 
But they won’t do that. They’re more interested in money in their pockets today than they are interested in their customer tomorrow. A short-term gain for a long-term loss. Good luck, Viacom! We all hope you have just as much success in your future as the RIAA!
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