Are MySpace, YouTube and their cousins illegal? This article in the Financial Times shows why the law has not kept pace with technology and changing consumer behaviour. Any business that gives users the power to express themselves online with music, videos, pictures and the like is potentially breaking the law. And what's more, what of businesses that operate across borders?
Here’s a snippet from the FT article:
Since the dawn of time, technology has constantly outpaced the law – but never quite as fast as in the digital age. Some of the most profitable and popular places on the internet today – from MySpace, to YouTube and beyond – exist in legal limbo. Every day, MySpacers and YouTubers commit millions of arguably unlawful acts. But what about the websites that provide a venue for all this new-age lawlessness? That remains a remarkably open question.
[…]
Copyright owners should get some of the profits generated by MySpace and YouTube – but they would be foolish to try to shut them down entirely. The US Supreme Court made clear last year, in the landmark Grokster case, that it will stand for quite a lot of copytheft, rather than impede innovation. The music and film industries can try to strangle the new sites with litigation, but they will probably not win in the end. Now is the time to let the market fix this problem, before any more harm is done.
Can someone tell me what it means to let the market fix the problem?
And when it comes to companies operating in multiple markets, think about this scenario: Imagine a company that is built around user-generated content and based in Iceland. Say some of their users upload copyrighted or otherwise disputed content belonging to an American media firm. Let's say these users are based in France, and let's also say that the content is physically hosted in Ireland. (Let's not even begin talking about mash-ups.) Even if this company managed to extract itself from legal hassles in the US arising from the DMCA (pdf), it would still be left wide open to challenges elsewhere. What a nightmare! Have VCs thought about how to mitigate this?
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