YouTube Finds A Way To Capitalize On Videos, While Viacom Investigates VC’s Motives

Posted Oct 8, 2008

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 

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.