Viacom Vs. YouTube a 'Geological' Shift in Media Landscape

Marketing Lawyer Ronald Urbach Says Ad Revenue Pot of Gold at Stake

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NEW YORK (AdAge.com) -- Viacom's $1 billion lawsuit against YouTube can be viewed as the moment the great tension between the content creators and the internet aggregators came to outright blows.
Ronald Urbach: 'This fight is part of an ever larger fight over who will gain those advertising media revenues.'
Ronald Urbach: 'This fight is part of an ever larger fight over who will gain those advertising media revenues.'
Ronald R. Urbach, partner and co-chair of the advertising, marketing and promotions group at New York law firm Davis & Gilbert (which is not involved in the case), answered some of our questions via e-mail about just what this courtroom battle might mean for the media landscape.

Ad Age: Does this threaten the future viability of YouTube as a legitimate media outlet? What impact will this have on the ad industry since YouTube has become a real advertising-driven media?

Ronald Urbach: With at least a billion dollars at stake, according to the lawsuit, it is likely that there will either be a battle, or a deal, of the century. My money is on a deal. This litigation shows us again that the world of digital advertising is ever more important to media, marketers, agencies and, most certainly, consumers.

Ad Age: Does this represent a real shift in power to the content providers over the new-media networks, or is part of a broader struggle of the new-media owners vs. traditional media owners?

Mr. Urbach: This battle symbolizes the charge by the content providers to regain ground from the new-media networks. This fight is no less important than we have seen over the years in retail marketing -- the retailers (e.g., Wal-Mart) or the suppliers (e.g., Procter & Gamble). Who will win the fight in the new media network world? We will have to see, but with so much change, it is likely that tomorrow's networks and content providers will even be more fundamentally different than today's, let alone yesterday's.

Ad Age: With many of the advertisers and agencies having their commercials put on YouTube without their consent, does this give greater power and interest for those whose rights may be used to challenge or attack? Will this mean that the agencies and advertisers who have not released the work be at risk?

Mr. Urbach: Some of the most creative and entertaining work is advertising content, and some of that work is on YouTube. When people read that there is a billion dollars at stake, the other stakeholders -- music companies, talent and other intellectual-property holders -- will be raising their respective hands with the refrain of "How much?"

Ad Age: What impact does this have on the rising marketing reality of viral?

Mr. Urbach: Viral relies on technology and the consumers ease of facility with it. YouTube represents a community where viral is necessary to achieve popularity, and popularity builds commercial success. If legal obstacles are so cumbersome, then at least a certain type of viral marketing may well be dragged and slowed down. With infinite choice for today's consumers, they may simply do something else and go elsewhere.

Ad Age: What are the ramifications if Google/YouTube loses? What sort of settlement could they be facing? And to turn that around, what's at stake if Viacom loses? What would it mean for content creators protecting their products?

Mr. Urbach: There is a lot at stake in this litigation. The dollars at issue are huge, but the big pot of gold is filled with the value of future advertising dollars. This fight is part of an ever larger fight over who will gain those advertising media revenues. The content providers are fighting not only for the value that their content will generate, but fighting another battle against another category of content creators -- consumers.

Ad Age: What business relationship should internet service providers be establishing with content creators to avoid these kinds of clashes? Does a business/contractual model currently exist that they should be modeling?

Mr. Urbach: This dispute is like geologic tectonic plates clashing together. We do not know if a mountain, an earthquake or a volcanic eruption will arise. But what is being created is rapid change. As for a business model, in a world of rapid change in media, technology and marketing, there is no one model. It is within the imagination of the business participants to structure deals that simply make good economic sense. From my experience, there are many historic models to draw upon to accomplish the clients' goals. The historic models are all premised on the concept of licensing content in exchange for the payment of certain monies. The other elements typically include enforcing the copyright owners' rights, payment of guaranteed royalties with a sharing of advertising revenues, and joint promotion and marketing of the parties' brands and properties.

Ad Age: Any similarities between the Viacom/YouTube case and the Universal Music Group/MySpace case? What is the potential for both of these cases to affect copyright law?

Mr. Urbach: Yes. The potential again is less about the strict analysis of copyright law, and more about who will share the pie. The fight is about will be at the table, and how much will be left for anyone else.

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Ronald R. Urbach is partner and co-chair of Davis & Gilbert's advertising, marketing and promotions group. He may be reached at rurbach@dglaw.com.
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