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Veoh to File Chapter 7; Copyright Battles Took Toll

Veoh to File Chapter 7; Copyright Battles Took Toll
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Feb 12, 2010 12:00 PM PST    Text size: 
LOS ANGELES — A sour economy and civil litigation — including one suit filed by Titan Media Group’s parent company — have prompted video website Veoh.com to file for bankruptcy.

Veoh co-founder Dmitry Shapiro wrote in a blog post that despite “great vision, a passionate team, tens of millions of users, millions in revenues and victory in court were not enough."

"The distraction of the legal battles and the challenges of the broader macro-economic climate have led to our Chapter 7 bankruptcy," he said.

Veoh spent untold millions representing itself against Titan parent IO Group and Universal Music Group over copyright infringement, which it won in both cases at federal court.

Veoh, like YouTube, have followed a practice set out in the Digital Millennium Copyright Act, which says that sites can wait to take down unauthorized content after receiving formal notification from the copyright holder.

Veoh had banked on a reputation for displaying sexual content that Google and Yahoo have refused to allow on their sites. However, one day prior to Titan filing suit, Veoh removed its adult category.

Titan at the time alleged that Veoh is responsible for infringing on copyrights held by the gay adult content company because users of the service had illegally downloaded content owned and produced by the gay content house. The alleged copyright infringements were more than 40,000 in all.

Gill Sperlein, Titan Media’s general counsel, told XBIZ on Friday that although the company feels vindicated with the company filing Chapter 7, “we don't really want to gloat.”

Sperlein further said that user-generated content sites can legally exist, but only if they’re run in a responsible manner.

“There are currently several different very robust systems for fingerprinting and identifying content, including Vobile and others,” he said. “These technologies reduce the risk that content will be distributed on these sites without the permission of the copyright holders."

(The Vobile software package, which was brought to adult biz’s forefront by the Free Speech Coalition at XBIZ LA, offers producers the ability to track infringing sites and determine what content they’ve pirated and other important data in order to issue take-down notices and for possible litigation.)

Titan Media’s vice president, Keith Webb, echoed Sperlein and told XBIZ that websites that choose not to adopt filtering and not to work with content producers are doomed to failure.

“The legal battles are simply too big to fight and will kill you in the end. In order to survive, both user-generated sites and content producer have to work together," he said.

“When we are on opposite sides of the fence we both lose, when we are on the same side of the fence we both win. One hand feeds the other.”

Veoh debuted in 2005 "with a bold goal: To make it possible for anyone with a video camera and a computer to broadcast video to the world," Shapiro wrote. The company later raised more than $70 million in capital from Intel, Time Warner and Goldman Sachs.

But the company announced in April that it would fire 25 workers and refocus on its video compass browser plugin.

"We grew our passionate audience base to over 28 million users per month, built a business with a run rate of $12 million, and helped educate many blue chip advertisers about the bright future that online video holds for them," Shapiro said.

Veoh.com currently is still live, but the company hasn’t hinted when it may go dark or where all the existing content will go.

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