IP Democracy: Schmidt: No Copyright Reserve in YouTube Price

The big danger of rumors on the Internet is that the unsubstantiated reports take on accepted veracity if repeated by enough bloggers or web sites. Case in point: YouTube critic Mark Cuban posted what seemed to him to be a legit insider summary of Google’s $1.65 billion deal to buy YouTube.

The newsworthy part of this summary was that Google had set aside $500 million in reserve to defend itself against the inevitable copyright infringement lawsuits that would follow its acquisition of the video sharing site. The anonymous posting reinforced Cuban’s view that only a “moron” would buy YouTube due to its copyright infringement liabilities.

When Cuban posted this account, the entire blogosphere jumped on it, to the point that it became, well, the truth. Not so, Google CEO Eric Schmidt said yesterday at the Web 2.0 Summit.

Schmidt denied that a substantial sum of money had been set aside for copyright litigation, but did confirm that Google is fanning out to cut deals with content owners, in part to insulate YouTube from legal threats.

In a two-part question, Battelle asked whether Google’s deal included a secret reserve for legal claims and, secondly, what progress Google was making in striking licensing deals with media companies to avoid threats of legal action.

“The former is not true,” Schmidt said in response to the question of whether “a very large sum of money was set aside to buy peace” between YouTube and big media companies.

“The latter is,” the Google CEO continued. “We have visited as many media companies as we can” to reach copyright licensing deals that can insulate both YouTube and Google, he said.

Based on what I’ve read, Schmidt wasn’t real chatty about the details of this rumor, other than to deny the report. To quell any further repetition of the idea that Google put money in escrow to deal with copyright infringement matters, Schmidt could have been more fulsome in his denials.

But still, Schmidt denied it and Cuban’s anonymous source is probably full of hooey — that was my gut reaction when I first read Cuban’s posting, which is why I didn’t jump on it too. All in all, this episode is a classic example of turning rumor into truth if you can get enough people to repeat the rumor.

Posted by Cynthia Brumfield on November 8, 2006 10:57 AM to IP Democracy