The Wall Street Journal has published an article stating that Viacom has filed a lawsuit against Google for copyright infringement. Viacom is seeking more than $1 billion in damages. While I assume that this will be a long trial, if Viacom was successful that would raise the cost of YouTube to a whopping $2.65 billion. This is all on the heels of Michael Eisner’s announcement that he would be investing in a new online video startup that will produce high quality productions aimed at distribution via the web.
This news highlights the fierce competition that is going to pan out in the online video marketplace which is in its infancy. Google’s decision to invest $1.65 billion in YouTube may turn out to have been a bad decision as the year progresses. Although I have a funny feeling that Google’s decision to purchase YouTube was not based on their ability to store millions of viral videos, but rather their ability to integrate into their future tv video advertising platform. After all Google is an advertising company.
My guess is a settlement will be reached and all Viacom videos will be removed from YouTube. After all, Google Video has always avoided posting copyright content. YouTube will most likely have to do the same in the end. I’m interested to see how Google turns YouTube into a profitable investment.