Today Google Inc. (NASDAQ:GOOG) subsidiary, YouTube is trying a new strategy to monetize videos. YouTube will be providing e-commerce links to goods that are related to specific products.  For example, if you are watching a music video of a song by Katy Perry, YouTube will provide a link to a site where you can purchase the song through iTunes or Amazon.com. 

This feature is applicable towards movies, video games, and books as well. 

Below is a screenshot of how it works:

This is a great way for YouTube to make sure that the copyright owners of this music will somehow get royalties for allowing the video to be uploaded on the site.  I believe It might be wiser to actually integrate the links in the video as many people embed these videos on external sites. 

While YouTube is finding ways to effectively monetize copyrighted material, Viacom Inc. (NYSE:VIA.B) is still pursuing their $1 billion lawsuit on the video sharing site.  Viacom filed discovery requests against YouTube’s early investors about why they chose to invest in them.  Viacom wants to find out if the investors believed that more users will come to the site because of copyright-infringed videos.

Jon Stewart and Demetri Martin mocked the $1 billion lawsuit in March 2007 on The Daily Show with Jon Stewart.  The Daily Show with Jon Stewart is aired on Comedy Central, a Viacom subsidiary.

Viacom sent the discovery requests to Sequoia Capital, Artis Capital Management, and TriplePoint Capital.  The three firms have decided to comply and will produce the documents necessary by October 27.  Sequoia invested in YouTube in 2005 and after Google acquired the video sharing site for $1.65 billion, the venture capital firm received shares in the search engine company worth $504 million.  TriplePoint received Google shares worth $6.4 million and Artis received shares worth $83 million.

Earlier this year, Viacom won the right to be given hard drives containing YouTube users habits. 

RealNetworks, Inc. (NASDAQ:RNWK) should have saw this coming when they release their new controversial RealDVD software.  While RealPlayer already allows you to download any video from YouTube or powered by Flash, RealDVD allows you to rip DVDs and make back up copies.  RealDVD was officially launched today.  Six major studios announced that they are suing the software company over the software.

These studios believe that many of Netflix and Blockbuster’s customers would just burn the movies that they rent with the RealDVD software, thus causing them to lose out on a great deal of money.  The lawsuit was filed at the U.S. District Court in L.A. 

“The incentive for the consumer is obvious and all but overwhelming,” stated a request by the movie studios.  The request was for a temporary restraining order. “‘Why,’ he or she may ask, ’should I pay $18.50 to purchase a DVD when I can rent it for $3.25 and make a permanent copy?’”

RealNetworks defends their software by saying it is legal.  RealDVD is sold for $30 per consumer at $20 for up to four licenses after that.  The software copy is locked into the original owner’s hard drive and does not alter the encryption technology used by movie studios already.  Copying one’s own personal copies of a DVD is “fair use” by law. 

The movie studios stated that RealDVD violates the Digital Millenium Copyright Act to bypass technologies that prevent the copying of a DVD without permission of the copyright owners.  The movie studios that are suing RealNetworks includes Viacom, Inc. (NYSE:VIA)’s Paramount Pictures, Sony Corporation (NYSE:SNE)’s Sony Pictures, News Corporation (NYSE:NWS.A)’s 20th Century Fox, General Electric (NYSE:GE)’s Universal, The Walt Disney Company (NYSE:DIS) studio, and Time Warner Inc. (NYSE:TWX) Warner Bros.

Viacom, Inc. (NYSE:VIA.B) operating company MTV Networks has announced today that they have acquired Social Project Inc.  Social Project and MTV worked together to build a company called Flux.  Flux is a social media platform that powers websites like 3hive.com, 50cent.com, pitbull.com, thedailyshow.com, rapbasement.com, souljaboytellem.com, pcdmusic.com, and wallflowers.com.

Flux powers a network of sites that has over 7.5 million users combined.  This platform competes directly with Automattic and Ning. 

“In developing Flux with Social Project, we took a radically different approach by building a media-centric social network that’s distributed, yet connected — and that approach has proven to be very powerful with our audiences,” stated Mika Salmi, President of Global Digital Media at MTV. “With this acquisition, we’ll continue and accelerate our vision for Flux, and connect our audiences to their passions and each other by helping them move content and their identity freely across the Web.”

Through the acquisition, MTV plans on adding more clients.  The 31 employees of Social Project Inc. will remain in Santa Monica, Calif.

New York City based television channel and subsidiary of Viacom, Inc. (NYSE:VIA.B), VH1 has created a celebrity blog called Scandalist (http://www.scandalist.com/).  Scandalist has entertainment news, photos, videos, and commentary. 

Scandalist also has “Top 100 Celebrity Scandals,” a list that features what the biggest pop culture controversies were including R. Kelly’s court case, Kurt Cobain’s suicide, etc.  The sidebar of the blog features the top 100 celebrity scandals, the most scandalous photos, most popular stories of the week, most popular stories of all times, suggested links, and top tags.

Scandalist follows the launch of the VH1 blog that has content revolving around characters that have appeared on VH1 and MTV’s shows.

“After taking a look at how quickly we were able to grow the VH1 Blog on VH1.com, we decided to look at ways we could go deeper with our blog coverage of pop culture and our VH1 shows and events separately,” stated Tom Calderone, President of VH1. “With a dedicated staff of writers, Scandalist.com will serve as a distinct, yet complimentary site for fans of pop culture, entertainment news and all things celebrity.”

Related Link:
1. SunHerald

Viacom, Inc. (NYSE:VIA.B) has won a court case against Google Inc. (NASDAQ:GOOG) in the United States District Court for the Southern District of New York.  Senior Judge, Louis L. Stanton ruled that Google must give Viacom private user data.  This will include the IP addresses, the videos watch, and the videos uploaded by uever YouTube user.

Viacom plans on using this data to prove that copyright infringement is more popular on YouTube than user-generated content.  The lawsuit began in 2007 when Viacom decided to sue Google for $1 billion shortly after the search engine company acquired YouTube.

Viacom also requested for YouTube’s source code, but fortunately the judge said no to that request.  The judge ruled that providing YouTube’s source code to Viacom could “cause catastrophic competitive harm to Google by sharing them with others who might create their own programs without making the same investment.”

“The court’s order grants Viacom’s request and erroneously ignores the protections of the federal Video Privacy Protection Act (VPPA), and threatens to expose deeply private information about what videos are watched by YouTube users,” stated Kurt Opsahl of the Electronic Frontier Foundation. ”The VPPA passed after a newspaper disclosed Supreme Court nominee Robert Bork’s video rental records. As Congress recognized, your selection of videos to watch is deeply personal and deserves the strongest protection.”

If Google decides to comply with this decision and not appeal to a higher court, then the privacy of all 80 million+ YouTube users are compromised.  TechCrunch also pointed out that the decision made in the New York court could be in violation of federal law.  What will happen next?  Stay tuned to Pulse 2.0.

Related Links:
Wired
YouTube
Viacom

Joost has been a viral hit thus far and many investors want in. Given that YouTube’s model gives a lot of power to users, the company is struggling to conform to the demands made by television networks. Viacom announced recently that they would be suing YouTube for $1 billion because of this.

However, it is in the television networks’ interest to partner with companies that have growing user bases and can host video content for them. This is why it does not shock me that Sequoia Capital, Index Ventures, CBS Corporation, Viacom Inc., and Li Ka-Shing (the 9th richest man in the world - $23 billion) have invested a total of $45 million in Joost. Sequoia Capital is also an early investor in Google and YouTube.
“This funding represents a tremendous vote of confidence in Joost’s platform,” stated Janus Friis and Niklas Zennström, co-founders of Joost. “We’ve carefully selected these investors from a variety of interested parties” because they can help Joost “accelerate growth and development of the company.”
[Information Source: WSJ]

The same founders of Joost also created Skype and Kazaa. Skype was acquired by eBay Inc. for a few billion dollars and Kazaa faced legal battles with the RIAA over music download abilities. Joost also has a dark side: spyware support.

I still have hundreds of invites so if anyone wants them, comment on this post.

This is hilarious. It’s a clip of The Daily Show where Demetri Martin, host of Trendspotting is discussing what would happen in the court room where Viacom owner Sumner Redstone would face off against Google guys, Larry Page and Sergey Brin. Found this via Mashable.

“This will be the largest advertising platform on Earth” stated Peter Chernin, President and COO of News Corp. on a media call that was reported on TechCrunch.  What Chernin is referring to is a future product announcement in collaboration with some of the leading media and Internet giants: News Corporation (owner of MySpace), NBC, FOX, AOL, MSN, and Yahoo!.  Advertisers that are already wanting in on the upcoming video website includes Cadbury Schweppes, Cisco Systems, Esurance.com, Intel, and GM.

“This is a game changer for Internet video,” stated Chernin. “We’ll have access to just about the entire U.S. Internet audience at launch. And for the first time, consumers will get what they want — professionally produced video delivered on the sites where they live. We’re excited about the potential for this alliance and we’re looking forward to working with any content provider or distributor who wants to take advantage of this extraordinary opportunity.”

When the video website launches, full episodes and clips of TV shows and movies like 24, Heroes, My Name is Earl, SNL, The Simpsons and movies Devil Wears Prada, Borat, and Little Miss Sunshine will appear on the website.

“This partnership is completely aligned with our continued investment in video on MSN and will allow hundreds of millions of our consumers to tune into a vast library of high-quality, safe and legal online video,“ stated Kevin Johnson, the President of Platform and Services Division at Microsoft Corporation. “Our alliance proves that you can deliver quality online video entertainment and protect intellectual property and copyright at the same time. We look forward to working together to explore additional opportunities to distribute this content across other Microsoft services and devices.”

The content will be delivered to users on News Corp.’s MySpace as well.  MySpace has 65 million users that will have access to the media content.  “The ability to embed video clips within over 160 million profile pages will empower members of the MySpace community to view, share and truly interact with some of the entertainment world’s most popular content,” stated Peter Levinsohn, President of Fox Interactive Media.

The name of the new video website is unknown, but Google executives have coined the gigantic media partnership, “Clown Co.”  I guess that is Google’s executive response to Steve Ballmer’s (CEO of Microsoft) statement: “Google built one very good business. They only have one thing they do. Everything else is sort of cute.”

vs.

Google buys YouTube for $1.65 billion. YouTube signs deals with CBS and NBC. Viacom signs deal with Joost (formerly known as ‘The Venice Project’). Now Viacom is suing Google for $1 billion because of YouTube’s “massive intentional copyright infringement.”

“YouTube’s strategy has been to avoid taking proactive steps to curtail the infringement on its site,” stated Viacom in response to their reason for suing YouTube. “Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws.”

According to the New York Times, over 160,000 unauthorized clips were uploaded to YouTube that belong to Viacom and were viewed over 1.5 billion times including popular Viacom-produced TV show, The Colbert Report. Negotiations had failed in the past between both Google and Viacom.

On top of that, Google/YouTube is also dealing with the owner of the Dallas Mavericks, Mark Cuban. Cuban had previously sold a company called Broadcast.com to Yahoo! for $5.7 billion. Cuban had recently asked Google to subpoena users that uploaded Mark Cuban’s movies illegally on YouTube [Source: Mark Cuban's blog].

As the story develops further, I’ll keep covering it up until the verdict is made.