Software's Newest Niche

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Gracenote has already seen the number of inquiries related to the latter product quadruple in the past year, says Stephen White, the company's senior director of product and content management. Gracenote's technology analyzes a video file's unique audio signature to identify the image. White declined to discuss planned pricing for the video tool.

Video Site Rivals

While these companies plan to license software, some could be bought outright by video Web sites (see BusinessWeek.com, 10/10/06, "YouTube's New Deep Pockets"). One possible target is Guba, a company that also hosts user-generated videos and sells movies and TV shows.

The company also has a tool named Johnny, which was launched about three years ago, and compares every image and video posted on the site with its library of about 3 million unique "signatures" of copyrighted files. A signature is essentially an image's unique print that can't be altered by cropping a video, renaming it, or speeding up its delivery. Guba CEO Thomas McInerney claims that Johnny can detect, using an image's color palette and other characteristics, and pass on for humans to review, more than 99% of the offending files.

While Guba has been asked to license Johnny for several years, so far it hasn't been willing to comply, viewing the search engine as a competitive advantage in striking deals with content providers, such as Sony Pictures (SNE), which offers its films through the site. "Johnny was a big part of that," says McInerney. The site makes money through advertising and online movie rentals (see BusinessWeek.com, 9/12/06, "Don't Nix Netflix Just Yet").

Questioning the Laws

Yet, implementation of this type of software won't be easy. Video tools' reliability still has to be proven. And using them could still cause companies such as YouTube and MySpace to weed out material that doesn't run afoul of copyright law. Many Web users today don't simply post copyrighted videos; they edit them, remix them, and change them—arguably, coming up with new creative works that these tools would block, says Lawrence Lessig, copyrights expert and professor of law at Stanford Law School.

"Increasingly, people will begin asking if copyright rules from the 20th century make sense in the 21st century," Lessig says. "Why should I hire a lawyer to show a video of my child turning three and dancing to a Madonna song? We'll see a growing conflict between the technology and the content. If [companies like YouTube] only dance to the tune of the content industry, they risk bad will from the rest of the Internet."

Some software makers say Web sites will side with the users—simply because that's the more profitable thing to do. "They don't want to pay for a solution, because their business is driven by piracy," says Brian Baker, CEO of software maker Widevine, whose investors include Cisco (CSCO) and whose video fingerprinting technology, identifying copyrighted material with 99.6% reliability, has been available since 2000. "They get more eyeballs because of piracy, and more advertising."

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.