YouTube operates on an advertising-supported business model. Videos are served free-of-charge and advertising appears on adjacent screen panels. In a recent Lightbulb IP law blog post I included a BlueFreeway graphic illustrating the increasing level of online advertising in Australia as we move deeper into 2007 - see  Online advertising, shaken not stirred.

Copyright contracts signed

Some copyright catalogue or copyright library rights owners or controllers have already finalised negotiations with YouTube. They apparently include CBS and NBC, evidence for which one YouTube user has noted seems to result in YouTube having a bias for CBS on its most viewed listings. There are channels in YouTube from CBS, NBC and PBS. The story also reports that several major music companies, including Universal Music Group, now owned by Vivendi, have forged agreements with YouTube.

Copyright contracts under negotiation and YouTube's legal options 

The quote in the opening paragraph of this post confirms that several copyright licences are currently under negotiation at YouTube. It's a question of deal making. Given the armoury of copyright and other law in place in the U.S., Australia and elsewhere, YouTube would be foolish to have an all out copyright lawsuit against it. It would lose, badly. Instead its options include those below.

• Share revenues on a regular basis with copyright owners or controllers.
• Aggressively filter and take down unauthorised videos (ie videos infringing copyright, usually because no licence for reproduction has been granted). This would probably also require a new and more time-consuming protocol and online form filing by users seeking to upload videos.
• Face new competition from video services from studios and television networks. Already in competition there is JumpCut and locally Telstra's WotNext and Yahoo!7 Video.
• A combination of the foregoing as well as other options.

 As The New York Times story notes:

Legal issues for mashups and sampling 

The story also briefly mentions the legal complexity for mashups, including the concerns of members of The Directors Guild of America. Mashups are visual media's equivalent to sampling in music. User-generated mashups appear frequently in YouTube. In Australia mashups and sampling are exposed to legal claims by copyright owners or copyright controllers under copyright law, moral rights law and trade practices law.

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Further Reading: In Lightbulb we have previously written about YouTube's copyright issues in Person of the Year caught in copyright scandal and section 4 of Recent IP law for hackers, spammers, editors and rippers. As practical assistance, you'll find six legal components for compliance with law in online ventures in Build trust for success online in 2007.