Silicon Insider: Viacom vs. Google

March 15, 2007 — -- It's MTV vs. Google, the icons of Gen X and Gen Y, in a Battle Royale. And didn't you just know it would come to this?

I probably don't have to tell you that on Tuesday, entertainment giant Viacom Inc. sued Web giant Google Inc. for $1 billion.

Viacom claimed that Google's subsidiary YouTube had violated copyright laws by allowing users to post and download proprietary Viacom company content, and it demanded that this content be removed from YouTube.

The sheer amount of money in the lawsuit aside, this may not seem a big deal, until you realize that Viacom is MTV, Comedy Channel and Nickelodeon, and that Viacom's legendary honcho, Sumner Redstone, also is the controlling shareholder of CBS, Paramount and Dreamworks.

Add to that the fact that YouTube has become one of the most popular social networking (i.e., Web 2.0) sites on the Web, and that its parent company, Google, increasingly is the Web (and a big chunk of the Web's advertising business to boot) and you have all of the ingredients for the most important corporate legal battle of this century to date.

Indeed, it is very likely that the outcome of Viacom vs. Google will determine the nature of the Internet economy as we go forward. At the very least it will set the cost structure for the Web and set important precedents regarding the protection of intellectual property, especially copyrights.

And that, I suspect, is precisely what Redstone has set out to accomplish.

To understand what's really going on here, we need to step back and get some perspective. First, some background:

Redstone, who will soon be 84, began his career working for his father's theater chain company, now known as National Amusements.

That early training, which began just before World War II, taught Redstone the value -- and profitability -- of content over carrier. He has pursued that strategy aggressively and shrewdly now for six decades, and today he stands not only as America's leading entertainment mogul, but also as its leading expert on the value of that content.

You can be very sure that Redstone spotted early on the future threat from YouTube and, before that, Google.. Unlike Time Warner and Conde Nast, his businesses avoided the mistake of unwittingly handing over control of its advertising revenues to Google.