05/31/2010 05:12 am ET Updated May 25, 2011

Viacom v. YouTube : Internet Piracy Destroys Creativity

Was YouTube, the popular video-streaming website founded in 2005, originally built on copyright piracy? That question lies at the heart of the lawsuit brought by Viacom, the creator of wildly popular television shows and first-run movies against YouTube and Google, which bought YouTube in 2006 for almost $1.8 billion. Documents recently unsealed in this case should remind us that online copyright infringement undermines not only America's world-leading, job-creating creative industries -- but also our world-leading, job-creating Internet pioneers, like Microsoft, Apple, eBay, Amazon, Comcast and Google.

The original founders of YouTube seem to have authored some of the most incriminating documents ever disclosed in any U.S. Internet-piracy case. They described an all-too-familiar plan with rare candor: build a business based on pervasive copyright infringement and then sell the "liability-bomb" to someone else. As one founder put it, "our dirty little secret... is that we actually just want to sell out quickly."

As a result, these documents suggest that YouTube's original founders rejected Google's own Don't-Be-Evil motto, and instead built their user-base "as aggressively as we can through whatever tactics, however evil." Their role models were piracy-driven services like "Napster" and "KaZaA." Their enemies were copyright-enforcing "bastards" and "a-holes." They bragged about piracy to their board and investors, and they quickly disabled "community flagging" for infringement because it could confirm what they already knew: "probably 75%-80% of our views come from copyrighted material."

Collectively, the YouTube founders seem worse than even the distributors of the Grokster and Morpheus file-sharing programs -- the losing defendants in the Supreme-Court case, MGM Studios, Inc. v. Grokster, Ltd. -- who concealed internal documents from the government because they feared "criminal investigation." Supreme Court Justice Anthony Kennedy's condemnation of the Grokster defendants thus seems applicable to the YouTube founders:

JUSTICE KENNEDY: ...[W]what you want to do is to say that unlawfully expropriated property can be used by the owner of the [technology] as part of the startup capital for his product.
JUSTICE KENNEDY: And I -- just from an economic standpoint and a legal standpoint, that sounds wrong to me....

Indeed, that sounds like stealing. And it is wrong -- from any economic, legal, or moral standpoint. Worse yet, if the courts find that YouTube's founders intended to exploit copyright infringement as their unearned "startup capital," then today's YouTube and Google could face huge liabilities because Google bought a company that had intentionally used piracy to destroy law-abiding competitors in the early streaming video market -- like Google's own Google Video site.

Even more ironically, after Google bought YouTube, it realized that legitimate businesses cannot monetize illegal activities like copyright infringement. Google thus stopped monetizing questionable YouTube videos and lost money for years while it cleaned up the site. Not even Viacom complains about the final result. Viacom and other creators have worked with sites like MySpace and Daily Motion to implement a consensus set of "Copyright Principles for [User-Generated Content] Sites" that call for cooperation, licensing, use of sophisticated content-identification technologies, and resolving disputes between users and creators without lawsuits. To their great credit, Google and YouTube have now implemented similar mechanisms.

Today's YouTube thus pays creators and respects copyrights. But that means that today's YouTube, just like yesterday's Google Video, is now another law-abiding, sustainable, job-creating business being undermined by unlawful competition from new, would-be Internet pirate kings -- like the theft-powered Isohunt website that one federal judge just denounced as "old wine in a new bottle."

Starry-eyed academes like Professor Lawrence Lessig once hailed massive copyright infringement as the Internet's "killer app" and "the crack cocaine of the Internet's growth." Sadly, that "crack" analogy has proven all too apt: crack and piracy both create only a brief, false euphoria that is unearned, addictive, and unsustainable.

Such romanticizing of Internet piracy must end. Our laws must encourage Internet entrepreneurs to build sustainable businesses based on legally acquired "startup capital" -- including content. And we must also think more seriously about how -- and against whom -- we want copyright owners to enforce their federal civil rights against the massive, global content theft intentionally orchestrated by the distributors of file-sharing programs like Grokster, Morpheus, and KaZaA, and websites like Isohunt.

Only lawful Internet commerce and services will create the sustainable economic growth and jobs that piracy now destroys. That is the real lesson of Viacom v. YouTube and the Internet-piracy cases that preceded it.