Viacom, YouTube air dirty laundry in legal battle

Viacom Inc. and Google Inc.'s YouTube site began airing each other's dirty laundry Thursday, providing a tantalizing peek at the wheeling and dealing that triggered a bitter battle over the copyright laws governing the Internet.

The previously confidential information came out as part of the evidence in a copyright lawsuit that Viacom filed against YouTube in 2007 for alleged copyright infringement of "The Colbert Report," "The Daily Show" and other shows.

The sensitive documents were unsealed because Viacom and YouTube are both trying to persuade U.S. District Judge Louis Stanton to decide the case without a trial.

Both YouTube and Viacom are getting muddied in the process.

Internal YouTube e-mails depict at least one of the company's founders as a video pirate and suggest the Web site's employees were more interested in getting rich quick than adhering to copyright laws.

Other records show Viacom wanted to buy YouTube at least seven months before it filed its lawsuit and often used the Web site to promote the shows on its cable TV programming.

Google bought YouTube for $1.76 billion in November 2006, but not before Viacom made a last-ditch effort to persuade Google to team up in a joint bid for the Web's leading video site, according to the court documents. A few months later, Google offered to pay Viacom $590 million for licensing rights to video, according to the records.

Viacom, the owner of Paramount Pictures and cable TV channels that include Comedy Central, instead sued Google and YouTube in a complaint seeking more than $1 billion in damages.

The media company alleges that YouTube allowed copyright-protected clips to appear on its Web site in its early days to attract a bigger audience. YouTube maintains it has always obeyed online copyright laws, which generally protect service providers from copyright claims as long as they didn't post the infringing material themselves and promptly remove it when notified about a violation.

But an e-mail exchange among YouTube co-founders Chad Hurley, Steve Chen and Jawed Karim showed there were in-house copyright abuses.

"Jawed, please stop putting stolen videos on the site," Chen wrote in the July 19, 2005, e-mail. "We're going to have a tough time defending the fact that we're not liable for the copyrighted material on the site because we didn't put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it."

In a statement after the documents were unsealed, YouTube said Chen's e-mail was referring to some aviation videos that had been making the rounds on the Web. "The exchange has nothing to do with supposed piracy of media content," YouTube said.

Karim left YouTube before Google bought it in 2006. But he kept YouTube e-mail on his personal computer, enabling Viacom to obtain correspondence that Hurley had said he lost, according to court documents.

In a July 29, 2005 e-mail, Chen advised Hurley and Karim to "steal it!" in an apparent reference to an unidentified video clip, according to the court documents. After Hurley asked if he wanted to steal movies, Chen replied, "haha ya. Or something."

Hurley, though, brushed off the suggestion, saying he had bigger ambitions than other sites that depended unauthorized video for traffic. "I would like to build something more valuable and more useful ... actually build something that people will talk about and changes the way people use video on the Internet," Hurley wrote.

YouTube was still in a testing, or "beta," phase at the time Chen and Hurley wrote their e-mails. The site didn't drop the beta tag until December 2005 when the YouTube was processing about 6,000 video clips per day. It now accepts about 24 hours of video per minute and hosts more than 500 million videos, according to the court documents.

Google had its own copyright reservations about YouTube before it struck a deal. Internal documents obtained by Viacom quote Google executives describing YouTube as "a 'rogue enabler' of content theft" and warning the site "is completely sustained by pirated content."

Viacom was sizing up YouTube as a takeover target before it launched its legal attack against YouTube.

MTV Networks, the division overseeing Viacom's cable TV operations, made the case for a YouTube bid in a July 2006 presentation.

"We believe YouTube would make a transformative acquisition for MTV Networks/Viacom that would immediately make us the leading deliverer of video online," Viacom's review said.

Viacom also hailed YouTube as "the dominant platform" for Web video and worried that the site would end up being sold to News Corp.'s MySpace. The documents didn't mention how much Viacom might have been willing to pay for YouTube.

The presentation was drawn up by Adam Cahan, an MTV Networks executive vice president. Cahan had left Google earlier in 2006 to work for Viacom.

Just a few days before Google announced its YouTube deal, Cahan tried to persuade his old employer to make a joint bid. "The idea would be: Viacom and Google buy YouTube," Cahan wrote in an Oct. 6, 2006, e-mail to Susan Wojcicki, Google's vice president of product management and the sister-in-law of Google co-founder Sergey Brin.

After Google announced it had struck a deal with YouTube on its own, Viacom employees continued to post a "boatload" of clips to the video site, according to a Viacom e-mail released Thursday.

Since Google's takeover, YouTube has struck licensing deals with many media companies, which now get a cut of revenue from ads shown on the video site.

YouTube won over much of the professional media by developing technology that automatically detects video and audio claimed by its copyright owners. It worked with another Silicon Valley firm, Audible Magic, on the audio detection.