The High Price of Getting Paid for Content

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Frank's path through the online video advertising world is one that many content creators would like to emulate. When he first started the show, he grabbed advertising anywhere he could find it, particularly Google's AdSense program, which shares ad revenue with the owners of sites where ads appear. As Frank became more popular, he sought more personalized and lucrative ads tailored more specifically to his audience.

After finding the right advertising combination, Frank had another problem—how to keep his content from being distributed on sites where Frank did not have creative control and did not see any revenue from the audience. Frank started by politely asking his viewers not to put his content on YouTube, which was not paying creators at the time. He also filed a few takedown notices.

No "Free-for-All"

As more video creators move from experimental sharing to serious business, they'll confront similar conflicts, Frank reckons. Do they want their stuff to spread virally across the Web, or do they want it to stay in a few key places where they have more control and a greater financial stake? Do they want some content to appear on mass market sites for publicity and other content to appear just on their own site? "You are going to get content creators to think about that stuff," says Frank.

In an unexpected twist, creators made famous by video sites may become more like the major media companies fighting YouTube. In fact, Bill Hart at Proskauer Rose is banking on it. His law firm, along with several others, filed a copyright infringement class action against YouTube on behalf of England's Football Association Premier League and independent music publisher Bourne Co.

Hart believes that the class, which will be certified over the next few months, could include many small independent publishers. "As the Internet matures and it becomes big business and young people see it as a potential market for their work, they will take it more seriously too," says Hart. "It isn't just a free-for-all."

Staying Out of Court

To an extent, the sites themselves hope that the Internet remains a free-for-all, regardless of who is paying the content creators. The hope is that the payments encourage more people to create better and better videos, as well as legitimize both the sites and the creators as places for professional, licensed content. "It encourages people to contribute more content," says Metacafe CEO Erick Hachenburg.

What they don't want is for that compensation to create more limits on content or, worse, lawsuits. "It is our belief that content is destined to move freely," says Revver founder and CEO Steven Starr. Hachenburg agrees. "If we get into exclusive licensing relationships with creators, I think that is a step backward," he says.

Still, Starr acknowledges that creators will want, and struggle, for control of their distribution. In addition to takedown notices, he suggests more people inform their users politely where they don't want them to post their content. Besides, turning away a little revenue from YouTube will be a lot easier than grappling with Google (GOOG) in court.

Holahan is a writer for BusinessWeek.com in New York.