Big Media Runs to the Nanny State

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Dean Baker
Truthout, April 3, 2007

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In today's hyper-competitive market economy, we all know what happens to businesses that can't compete: they run to the government for help. That is exactly what Viacom did last month as it became concerned about its future prospects in the Internet age.

Viacom is one of the world's biggest media companies. It owns MTV, Comedy Central, Showtime and Paramount Pictures in addition to many other cable networks. Its gross revenue was almost $10 billion last year and its profits were $1.26 billion. It also manages to write very healthy paychecks for its top executives. Three years ago, it split $160 million in compensation among its top three executives, enough to support almost 15,000 workers for a year at the minimum wage.

But all is not well at Viacom. Its stock price is down by close to 10 percent over the last year and a half, the period since it decoupled itself from CBS, reversing an earlier merger. Apparently the markets question Viacom's ability to prosper in a world in which web postings of video clips, produced spontaneously by millions of people around the world, take up an increasing portion of the time of its potential audience.

The point is fairly simple: if people are watching video clips that college students or frustrated office workers produce in their spare time, they will have less time to watch the latest Britney Spears MTV clip or the newest third-rate comedy flick from Paramount Pictures. To deal with this problem, Viacom wants the government to shut down the competition. It sued YouTube last month to require it to get advance approval for any copyright-protected material that gets posted on its site.

While the issues involved in this suit may seem very complicated, they are actually quite simple. In 1998, Congress passed the Digital Millennium Copyright Act (DMCA), which dealt with exactly the sort of problem that Viacom is raising. This law clearly sets outs out the legal responsibility of web site hosts such as YouTube. Under the DMCA, a copyright holder has the responsibility for notifying a host, such as YouTube, of any copyrighted material that it has posted. At that point, the host has the obligation to remove the copyrighted material or risk being sued for damages for copyright infringement.

The top officials at Viacom are very familiar with the DMCA; their lobbyists played a large role in writing it. However, having gotten their way with Congress less than a decade ago, they are now unhappy with their own bill. They want YouTube and other hosts to be responsible for prescreening posted material to determine that it does not infringe on copyrights. This sort of prescreening would impose an enormous burden on YouTube and other sites that host video (or audio) material produced by the general public. Clearly, the days when anyone could quickly and without cost post any zany video clip that they had produced would come to an end.

It is important to recognize that this lawsuit is not just a battle between two huge companies (YouTube is now owned by Google). The purpose of the DCMA was to bottle up the web, giving major media companies like Viacom a mechanism to enforce their copyrights in a new medium. Now they have decided that the DCMA didn't go far enough. They want the state to enforce their copyrights in a way that will strangle a distribution system that has already allowed hundreds of millions of people located all around the world to see tens of millions of video clips.

The public has a huge stake in ensuring that YouTube and similar sites don't have to spend themselves into bankruptcy to ensure that none of Viacom's copyrighted material ever appears without permission. Viacom has a simple remedy when their copyrighted material appears on a site: tell them about it. Viacom officials thought this was fine when they helped write the law back in 1998. If they don't think they can live with it today, maybe they should look for a new line of business. It would be much better than suffocating the web with Byzantine rules for copyright enforcement.

 


Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (www.conservativenannystate.org). He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.