• The Wall Street Journal , Monday, October 16, 2006 11:30 AM

News Corp., General Electric's NBC Universal and Viacom, Inc. are banding together to mount a potential lawsuit against Google, Inc. and its new acquisition, YouTube. This might be a negotiating tactic by the media companies to ensure that Google cuts them a favorable deal, but according to the group's lawyers, YouTube could be liable for copyright penalties of $150K per unauthorized video. Viacom, for example, believes that video clips from its channels--including MTV, Comedy Central, and Nickelodeon--are watched 80,000 times a day on YouTube. That adds up to billions, if you do the math.

The legal maneuvering comes as each of these companies holds separate negotiations that would allow YouTube to carry their content in return for a slice of ad revenue. Top execs obviously feel that threatening legal action will ensure they get a favorable deal. Everyone in media fears Google's size and clout. Google wants to be the de facto ad system for Internet media. It could be a valuable partner for media companies with its superior technology, but would also become more powerful than it is today.

So how far can media companies go with their legal threat? Most agree that YouTube is no Napster. Fred von Lohmann, a lawyer at the Electronic Frontier Foundation in San Francisco, says "YouTube looks to be on relatively firm legal ground," but John Palfrey, an intellectual-property professor at Harvard Law, says YouTube shouldn't fall within the safe-harbor protections of the copyright law because, among other reasons, YouTube is deriving direct financial benefit from the infringement.

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