September 20, 2006
Universal Suing YouTube, MySpace?

It's a textbook example of corporate logic that defies every bit of the concepts we discuss surrounding grassroots advocacy and viral marketing, and it's frankly pretty mind-boggling how and why companies keep coming up with such strongly prohibitive language.

The case this time? Universal's music division, the Universal Music Group, who are currently suing two of the most popular online social networks out there, YouTube and MySpace.

We've written in the past about the cultural power sites like these are gathering, such as here and here and here. For the most part, record labels have embraced the ways in which these site are able to reach customers through user-generated campaigns, word-of-mouth spread through the 'Net by sharing music and videos on MySpace and YouTube pages.

However, not every company is appreciative. For every small-time band trying to reach new listeners through MySpace or corporate label promoting their music videos through YouTube, there are other companies ready to send cease and desist letters to protect their copyrighted property.

Last Wednesday, Universal Music's CEO announced plans to sue, being quoted by AP business journalist Alex Veiga as saying, "We believe these new businesses are copyright infringers and owe us tens of millions of dollars."

The company has lawsuits planned, and MySpace may be seeking a deal.

According to Veiga, Universal has "made it a priority to get compensation for content that was once seen as purely promotional." This prohibitionist stance may make sense in the severely short-term, since the idea of losing money on a particular piece of content tends to get people upset.

But angering millions of YouTube and MySpace users may not be the public relations campaign the company is looking for. It's almost as mind-blowing as Diet Coke's reaction to all the publicity surrounding that explosive and fresh Mentos campaign that was popularized through sites like YouTube.

While I'm busy blogging about the social power that grassroots advocacy provides to fans while also giving great financial incentives for the brands themselves, groups like this are proving that they are not interested in promoting their brand and instead giving it a black eye.

It's easy to see why Universal would react this way while simultaneously mind-boggling that no one has been able to convince the company of the error of its ways. In their mind, they are seeing these sites capitalizing off fans, almost as if YouTube or MySpace is a leech that is taking profits by becoming a middle man for the users, but they are missing the power of these sites completely if they don't realize the vast importance of users in this process and that these types of moves will anger those users, who are coincidentally also either their customers or their potential customers.

Thanks to Margaret Weigel for sending this along.