Under a Red Flag: The Other Side of Whack a Mole–will it be back to the future for MCNs?

Après moi, le déluge

Attributed to King Louis XV of France

Right after Google’s YouTube acquisition, Googler Zahava Levine appeared on a bar association panel in Los Angeles and sneered at the assembled entertainment lawyers that even though YouTube was using their clients’ works without permission, YouTube would continue to rely on the DMCA notice and takedown.  Unless, of course, “Hollywood” wanted to stop playing whack a mole and make a deal.

And the assembled room witnessed the birth of an urban legend: The Notice and Shakedown.

And what  many told me they thought (after where do they find these people) was why would Google want to play whack a mole.  Surely this game of “catch me if you can” is going to come back to bite them?  (See Parlophone.)

Fast forward a few years and enter the multichannel network (or MCN), somewhat shadowy groups of content producers and aggregators on YouTube.  If I had to bet, my bet would be that when Google contract with MCNs, Google place a fig leaf on clearances for music used in MCN programming–they place the burden on the MCN.  If Google then gets a claim for infringement, they simply tender it to the MCN as an indemnity claim.

Enter the Very Successful MCNs.  These MCNs make real money and attract real investment, sometimes from Google itself.  Based on the announcement of the Universal deal, it now becomes apparent that there must be a significant amount of uncleared music on these MCNs.  And, of course, if Google invests in an MCN that has a contract with YouTube…Google will have diligenced the MCN as part of its investment (or certainly had the chance to do so).

So what does that mean for Google’s “see no evil” version of its Notice and Shakedown defenses?  I think it’s called “actual knowledge” that appears under a red flag.

Why is this meaningful?

Hard on the heels of the news of Universal’s deal with Fullscreen and Makers, the National Music Publishers Association made it clear that just because one publisher made a deal with two MCNs doesn’t mean that those two MCNs don’t have a problem with other songwriters, and that other MCNs don’t have a problem with all the songwriters.

‘Recent news that two large multi-channel networks (MCNs), MakerStudios and Fullscreen, have reached a licensing deal with Universal Music Publishing Group is an important first step in compensating songwriters.  But let me be clear – all MCNs must be licensed for the use of all songs. This agreement between two MCNs and one music publishing company does not solve the entirety of the problem.  As the popularity of digital entertainment has grown, MCNs have significantly profited, often without compensating the songwriters whose work is being used.

Those who use the works of songwriters in videos must fairly compensate those songwriters and music publishers, and NMPA is committed to finding a complete solution.”

So let’s crystallize that for the MCNs:  If you get down on your knees and beg to be sued, don’t be surprised if someone sues you.

And your good buddies, you know, your “partners,” at Google?  They will throw you under the bus in a heartbeat.  If they haven’t already.

Listen up–Google advertised the sale of prescription drugs to kids.  They distributed sex club apps that exploit teens.  Do you really think people who can do that give a damn about an MCN?

And ask yourself this Mr. MCN investors–why do you want to play whack a mole?  What possible motivation could you have?  Because you don’t make as much money as Google, so your profit motive is radically different than theirs.

I’d say there’s another element of brilliance to the Universal deal–they got their songwriters’ money out first.