Analysts don't like YouTube's chances

Forrester argues that while YouTube may have media companies' attention, one copyright lawsuit could undo it all.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read
Another Internet research firm has predicted doom for YouTube's business model.

Copyright issues that have plagued video-sharing site YouTube since its official launch almost a year ago will mean that "YouTube will get sued. And it will lose," wrote Josh Bernoff and Ted Schadler, analysts for Forrester Research, on a blog posted last week.

Lawsuits will trigger a chain reaction, according to the analysts, in which YouTube will be forced to remove all copyrighted material--and that means excising most of the professionally made content. What's left will leave YouTube with videos that are "a lot less interesting," said the Forrester analysts.

YouTube representatives did not respond to an interview request.

The Forrester opinion comes three months after research firm IDC came to a similar conclusion and less than a week after HDNet founder Mark Cuban told a group of advertisers that "only a moron would buy YouTube." Both Forrester and IDC research companies argue that YouTube will face the same battle fought and lost by file-sharing site Napster.

In a now-famous court case, Napster argued unsuccessfully that it wasn't responsible for people misusing its file-sharing system to steal music.

YouTube says much the same thing. Most of the material on YouTube is homemade, meaning that the video's creator is the same person who posts it to the site. However, some YouTube fans violate copyright law by sharing video of copyright material from movies, music videos and TV shows.

YouTube executives immediately pull down any clip once a copyright violation is brought to their attention. The company, which sees more than 16 million visitors per month, is also creating technology that will help identify and block pirated material.

San Mateo, Calif.-based YouTube has proven that it's not at odds with some of the most influential entertainment companies by cutting marketing and advertising deals with the likes of Warner Music and NBC.

But that won't be enough, said Forrester.

"You may tell me that companies like Warner Music are happy to work with YouTube, just as Bertelsmann was willing to work with Napster," the analysts wrote. "But for every company that wants to do a Warner-type deal, there will be others like Universal that won't stand for it.

"It only takes one unhappy media company--Disney, Sony, CBS or News Corp. for example--to force the company's hand. And the cases on this point, from Napster to Grokster at the Supreme Court, are clear."