YouTube, one of the world's most popular Web sites, might be headed for a crash. At least one industry watcher is predicting crippling copyright-violation litigation coming from the entertainment industry.
Forrester Research has added its voice to the growing chorus of naysayers who believe video service YouTube will soon go the way of Napster, the once-ubiquitous file-sharing service brought down by a myriad of lawsuits.
"I don't believe they can avoid a lawsuit and maintain their popularity," said Forrester's Josh Bernoff.
Much like Naspter during the late 1990s, YouTube is building its business by using material that often contains copyrighted content. Although Napster eventually rebounded and relaunched in 2001 as a legitimate digital-music service, it never regained its massive popularity.
Remarkable Growth
YouTube has grown dramatically over the last couple of years by providing users the ability to post and share videos with a worldwide audience. It is the third most viewed site on the Internet after MySpace and Yahoo.
Recently, financial analysts have tagged the company's value at around $1.5 billion.
However, of the more than 100 million videos watched daily on YouTube -- approximately 60 percent of all videos watched online -- an estimated 90 percent violate copyright laws, according to analysts.
Universal Music Group, the world's biggest record company, recently accused YouTube of being a serial copyright infringer. Universal CEO Doug Morris said as much during a Merrill Lynch investors' conference speech last month.
"The poster child for [user-generated media] sites are MySpace and YouTube," said Morris, according to publicly released transcripts of the closed-door meeting. "We believe these new businesses are copyright infringers and owe us tens of millions of dollars."
YouTube officials did not immediately respond to request for comment.
Copyright Content
One big issue for YouTube is that most of the videos on its site created by amateurs are accompanied by other people's music. "If YouTube was to police all submissions, and post only original content from users, the material would be less entertaining, and the site would lose a large percentage of its visitors," said Forrester's Bernoff.
The company has made moves to stave off potential lawsuits from the music industry by trying to cement deals with players who might have the most reason to go after them in court. Last month, for example, YouTube inked a deal with Warner Music Group to distribute music videos. And in June, NBC said it would promote its fall TV lineup on YouTube.
Bernoff wrote in a recent blog posting that YouTube needs to proactively make more moves like these, or it's going to be a lot more difficult to maintain its user community. Bernoff also said YouTube would be best served by removing the reams of copyrighted material on its site and allowing users to only post material that does not violate copyrights.
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