The End of Free Trade?

YouTube is growing up. The video-sharing site, recently acquired by Google, is taking steps to become a more responsible corporate citizen. At the very least, it intends to avoid the fate that just befell Bolt.com and the Sony-owned Grouper, two similar, but smaller sites who are facing massive lawsuits for copyright infringement.

Universal Music, the same record label that led the legal charge against Internet music renegade Napster, is asking for damages of up to $150,000 for each instance of infringement on Bolt and Grouper—every streamed Mariah Carey video, for example. Grouper and Bolt, Universal said, “cannot reasonably expect to build their business on the backs of our content and the hard work of our artists and songwriters without permission.”

Lately, YouTube has been actively seeking that permission. The company recently struck ad-revenue-splitting partnerships with Universal Music, Warner Music and Sony BMG. But now comes the hard part. As a condition of those deals, YouTube has agreed to filter its site for the labels’ music and offer the music giants the opportunity to pull infringing content off the service if they don’t like how it’s being used. The technology that will help them do this is called “acoustic fingerprinting.” If it works, this model could help put the music industry back in the driver’s seat after years of watching their product enjoyed for free on the Web. If it doesn’t work, the newly minted “GooTube” and even MySpace may be joining Grouper and Bolt as defendants in court.

Think of acoustic fingerprinting as an automated version of the card game Go Fish. Record companies give their complete catalog of songs to acoustic-fingerprinting technology firms like Silicon Valley’s Audible Magic. Audible Magic’s software analyzes each song and assigns it a numeric identifier based on the unique properties of the sound file. Then the firm’s antipiracy filter monitors the songs uploaded to the media-sharing Web sites and attempts to find matches—digital files that share the same acoustic characteristics as the originals. If they find a match, the software filter allows the copyright holder to decide whether they want to yank the video or grant permission.

Filtering technology would be a significant move toward giving industry players a better idea of how much of their proprietary material is circulating on the Web and more control over how it is used. That’s not an easy feat. Sixty-five thousand new videos are being uploaded to YouTube each day. “Whenever you have a user-generated content system, the first thing you have to do is figure out what’s being stored on the network. If you don’t know what it is, there’s nothing you can do about it,” says Audible Magic CEO Vance Ikezoye.

Ironically, Audible Magic, a leader in the industry, owes its current privileged position to file-sharing pioneer Napster, the startup that initiated the music industry’s current troubles. Originally, the Los Gatos, Calif.-based firm, now seven years old, had a dot-com-flavored business idea: it was developing technology that could automatically recognize songs played over the radio—a sort of robotic, musical savant. When Napster suddenly took off, execs at Audible Magic decided that their song-recognition technology was better exploited for filtering the coming wave of copyrighted material that would be posted on the inevitable Napster knockoffs.