Universal Music has begun to go after user-generated content sites in a big way. In October, Universal sued video-sharing sites Bolt and Grouper, alleging that each is liable for the posting of copyrighted material by users. Recently, Universal filed suit against a much bigger (and richer) opponent, MySpace, on the same theory. (A copy of the complaint will be available here shortly.)
Most of the discussion about these suits has centered around whether the Digital Millenium Copyright Act ("DMCA") will protect the defendants from liability. It provides a "safe harbor" for online service providers ("OSP's") who lack actual notice of copyright violations so long as they take down infringing material upon actual notice of it from the copyright owner. See 17 U.S.C. 512(c).
But there is trouble lurking. An OSP that has the ability to control infringing conduct can't take advantage of the safe harbor if it profits directly from the infringement. See 17 U.S.C. 512(c)(1)(B). Enter contextual advertising. It keys ads to the content the user seeks and sees. If MySpace earns revenue from contextual ads that show up alongside a pirated U2 video precisely because I searched for U2, it would seem MySpace is profiting directly from the infringing material.
[continued -- press "read more" below] Read more » about Will Universal's Campaign Against User-Generated Content Lead Us Back To Sony?