Meanwhile, Viacom could also be affected, if its position angers consumers, the IDC analysts wrote. "Unlike the RIAA, Viacom is not going after individuals, but that may not matter to users," they wrote. Viacom also risks missing out on the momentum of online video if access to its clips is too restricted. "Ultimately, it's not good for anyone that consumers cannot access content in multiple different ways, including on YouTube," Happe and Feldman wrote.
The copyright issue has long been a known liability for YouTube. Founded in early 2005, YouTube quickly became the world's most popular video-sharing site, beating established players including Yahoo, Microsoft's Internet unit, AOL and Google.
Impressed with that popularity, Google bought YouTube last November for US$1.65 billion in an all-stock transaction, but put 12.5 percent of the amount in an escrow account for one year to, it said, "secure certain indemnification obligations."
Since the acquisition, Google and YouTube have been busy negotiating with video content owners and developing technology to detect and remove copyrighted videos uploaded by users without permission.
Beyond its attempts to strike deals with corporations, Google has recently also indicated its intent to share revenue with individual content owners. It has also begun integrating YouTube with the similar Google Video service.
"We're pushing very, very hard for the success of YouTube as a brand. It has tremendous traction with the demographic that we care about. An awful lot of people are now using YouTube every day in their daily lives," said Google Chief Executive Officer Eric Schmidt this week during the company's quarterly earnings conference call.
Schmidt said Google's primary focus with YouTube is user adoption, while it also experiments with advertising models. YouTube is growing its user base and advertising very fast, to the point that it's now clear to Google that the price it paid for YouTube is clearly justified, Schmidt said.
In its statement, Viacom precisely complained that Google is benefitting from its content without providing Viacom with adequate compensation. "YouTube and Google retain all of the revenue generated from this practice, without extending fair compensation to the people who have expended all of the effort and cost to create it," Viacom said.