Last week YouTube announced that they were adding 3,000 new movies to its pay-to-watch movie library, a direct competitor with companies like Netflix and Redbox. This is a big change for YouTube since in the past they have focused on user-generated content from their members. There are rumors that Google has secured licensing deals with Sony Pictures Entertainment, Warner Bros., and Universal in an attempt to build out their content library on YouTube.
The prospect of licensing content for distribution via YouTube is a significant change for Google, which has for the most part avoided paying for content with the preference for aggregation. YouTube has been strongly criticized in the past for its cavalier approach to copyright infringement and philosophical standpoint favoring technology to art or content. Viacom demanded over $1 billion in damages, alleging that YouTube knowingly distributed copyrighted content to its users. In 2010, Google was handed a decisive win when the US District Coupt of New York when it ruled that the “safe harbor” provision held Google free from being responsible for the actions of its users provided that they satisfy industry practices of notice and takedown for copyrighted content.
This is a significant about-face for Google given that they have been on the opposing side of the copyright discussion for so long. News of the Google deal to distribute pay-to-play video content sent Netflix shares tumbling about 5%.