For anyone studying business, Google's copyright conundrum is a fascinating issue: It faces lawsuits and threats from disgruntled media companies, while using its massive audience and unparalleled
technology for finding information as leverage against the looming threat of copyright disaster.
What will the courts do? Will big media companies relent? At the heart of the matter is
a clash of interests, says Wharton professor Patricia Williams. Traditional media companies "have models that have evolved to be inefficient," she says. Compensation for a video clip on YouTube in the
offline world involves several parties in the big media food chain. Unless the ad revenue is significant, it's hardly worth it to sign YouTube as a distributor. Moreover, Google's ad model is built on
algorithms; big media relies on relationships.
Compounding that complexity is Google's interest in becoming the de facto purveyor of all video on the Web. If that happened, companies
like Viacom fear losing control over their content. But as Wharton legal studies professor Kevin Werbach says, the catch-22 is the glaring fact that "Google is extraordinarily good at the two things
that underlie most media businesses: directing users to content and matching advertisers to users."
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