Content Reference Library

Last year, Viacom filed a lawsuit over $1bn against YouTube/Google. Viacom’s claim is that youTube illegally distributed to its users content owned by Viacom. The problem is that actually nobody knows what content is owned by whom. Even Viacom doesn’t know which content it actually owns.

Here is an example of what I mean. Viacom ordered an independent film maker, Joanna Davidovich, to remove from YouTube a film she made and that they thought was owned by them. The problem was that this film actually wasn’t owned by Viacom, they contacted her in error. A Viacom executive got in touch with her later to explain what happened.

Joanna wraps it up as follows:

I was personally contacted by an executive at Viacom, who explained how my film got mixed into their system. Juxtaposer was in a film festival that was presented by Nicktoons, which is of course a Viacom company. They offered selections of the festival as downloadable content, and Juxtaposer was one of them. They just forgot that Viacom’s rights to those films were all nonexclusive. He personally assured me that Viacom is no longer making a claim to my film and YouTube should be sending me documents affirming that shortly.I don’t think this would have been over with nearly as fast if not for the publicity I got from your post. This could have been a nightmare, but it wasn’t. Count this one a success!

Effectively what that means is that nobody knows with 100% certainty who owns what content. Not even Viacom. Now, Mike Arrington says the copyright law should get changed. I disagree. What should get changed is not the law as such, but how the law is actually implemented in practice. What we need is a reference library with referencing technology attached to it, where every distributor of electronic content material can automatically reference check the content they are distributing. When a distributor is not doing so, and they end up distributing copyrighted material illegally, they could be deemed to have not complied with the law.

For example, you could easily translate the sound in videos to written text and create an index of that text. You could subsequently query that index with text you discover in your video/music/text/etc sharing site. Content owners could publicly claim their content in that reference library (in certain geographies and for certain distribution channels).

Having such a reference library would actually indirectly increase the value of the overall ecosystem, as it would help all creators of content to claim (and offer for distribution and license) their content.

I am not sure whether any content company would want that reference library. Probably too much work. And it would only indirectly generate revenues. It is so much easier to sue Google than to try to get the job done right in the first place.

Maybe Umair should have a word with them. Maybe they can be made to understand that this would actually increase the value of their business. Sounds like quite a long shot.

PS: See the little (R) sign next to the Vicom logo? Bad bad me for including it in this post!

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Cuil will fail as long as it tries to ‘kill’ Google

Many companies are started to ‘attack’ a sector than is ‘held’ by another company. This sector is usually very valuable, which is the reason why start-ups try to capture these sectors.

The problem is, you don’t capture sectors, you capture markets. And when you have no customer focus, you probably won’t capture customers and as a consequence, you won’t capture the sector.

My thinking here goes as follows. Very successful companies come to dominate or create a sector because they were able to provide a unique (at least when they started) service that was (and probably is) of great value to customers. Subsequent generations of start-ups then try to ‘take that business away’ from the incumbents. This can work. However, it can only work when you manage to win over the customers. You can only win over customers, when you have a value proposition that is significantly better than that of the incumbents and that is actually valuable to the customers. If you don’t, then you can’t win the market. And if you can’t win the market, you won’t be able to win the sector.

The company that people seem to target a lot these days is Google. The reason is obvious, Google makes a lot of money and people want that money.

The latest start-up that seems to try overturning Google is called Cuil. I have probably read some 10 articles about them yesterday. Great press coverage. Indeed, it was so good, people commented on it. However, all that the press coverage seems to focus on is that Cuil wants to ‘kill’ Google. Hardly anybody seems to be raving about the features of the site. I haven’t read once an expression along the lines of: “Gosh, now this is how search should be!” Not once. Read what TechCrunch, GigaOm, and ReadWriteWeb wrote.

Cuil actually has some very interesting technology that allows it to operate its search engine at a faction of the cost that it takes Google to run its operations. This is very interesting and it is actually useful. However, it is in no way useful to the users or the customers of a search engine. Unless Cuil can find a way to translate that advantage into something that actually means users have a significantly better search experience, why should they care?

Cuil’s natural target market is the people who have a pain that they can make go away: search engines. If Cuil can significantly lower operational costs of search engines (and maybe even other companies, who knows), then these search engines would probably be very interested in talking to Cuil.

Cuil has decided to, at least according to the press, ‘kill’ Google. What a shame. There is no unique service there that I can see right now that is of great value to the customer. They could have helped Google and all other search engines to become even more successful by lowering their costs. There is some real pain there and some real customers.

Don’t kill. Make pain go away. Make happy.

UPDATE: Funnily enough, I am not the only person going through this thought process. Just saw a post by Jason Calacanis here and by Fred Wilson here.

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VC Fund Raising Manual – 7 Term Sheet

When you are out VC fund-raising, getting a term sheet from a VC firm is the crystallizing moment of your relationship with that firm. If you sign it, you are very close to getting the funding. But before you sign it, you need to negotiate it.

This article is part of a series, you can find the Index of the VC Fund Raising Manual here.

Negotiating a term sheet is difficult, largely because you don’t know what the real market value of your company actually is. How do you establish that? The VCs see lots of deals, they know the market better than you do. How can you equalize that position? There is only one solution to this problem:

Unless you have multiple term sheets on the table at the same time, you have no way of assessing what the real market value of your company is. Also: being able to walk away from a deal will put you in a much stronger negotiating position.

Imagine it like looking for a new job. Ideally, you want multiple job offers at the same time, so you can choose the best one. It is the same with VC funding.

The secret to successfully raising funding is that all communications that you have with VCs must lead to a point in time where all the different people give you a term sheet. In the best scenario, you get them all on the same day. If not, then you get them in the same week. Getting them all in the same month is most likely too far spaced apart. In order to be able to receive multiple term sheets at the same time, you have to start talking to VCs at the same time. Ideally in the same week. Pursue VCs in parallel, not in sequence.

For all other aspects of how to negotiate a term sheet, I suggest you visit Venture Hacks. I think the picture below speaks more than a 1000 words about how useful that site is for ‘hacking’ a term sheet, enjoy:

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