- Reuters, Thursday, September 14, 2006 11:02 AM
Universal Music Group, the world's biggest recording company, could apply legal pressure to YouTube and MySpace after its CEO accused the Web sites of copyright infringement. During a Merrill Lynch
investors' conference, UMG chief Doug Morris said: "We believe these new businesses are copyright infringers, and owe us tens of millions of dollars," adding ominously: "How we deal with these
companies will be revealed shortly." Sound like legal action? You bet it does. "This could be the first salvo from a content player against business models based on user-generated content, much of
which relies on copyrighted material," Merrill Lynch analyst Jessica Reif Cohen said in a research note Wednesday. According to Reuters, Universal--which is owned by French media group Vivendi--has
been in negotiations with both YouTube and MySpace to offer artists' music legally for a fee. But that's just not either company's style. Thus far, online video sites have been given free reign with
respect to copyrighted content, partly because their users upload the content. They also remove any copyrighted material once it's been brought to their attention. But the question on the table is how
record and movie companies should be compensated. Recently, YouTube has unveiled a series of "brand channels," which copyright holders can sell ads on to make money. But record companies are leery of
repeating the same mistake they made when they allowed MTV to air their artists' music for free. Morris said that MTV "built a multibillion-dollar company on our [music] ... for virtually nothing. We
learned a hard lesson."
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