November 17, 2006, 7:52 AM — Google Inc.'s YouTube signed a contract with the National Hockey League (NHL) to offer game highlights, the latest deal struck by the video sharing sensation as it attempts to stamp out pirated clips from its site and avoid copyright lawsuits.
YouTube has reached similar agreements in recent months with Sony BMG Music Entertainment, Universal Music Group (UMG), CBS Corp., Warner Music Group Corp. and NBC. At the same time, it has taken more aggressive steps to flag and remove illegally copied videos from its site.
Still, Google is clearly concerned about potentially costly litigation involving YouTube, which lets users upload, comment on, rate, share and tag video clips. On Monday, Google announced the closing of its US$1.65 billion, all-stock YouTube acquisition and said it has put 12.5 percent of the amount in an escrow account for one year "to secure certain indemnification obligations."
A Google spokesman said on Thursday that setting aside a portion of the payment price is common when a public company acquires a private company, but he couldn't say whether Google has ever taken this step in previous company purchases. After the 12-month period ends, Google will pay out to YouTube shareholders the money in the escrow account, he said.
YouTube ranked as the 26th most visited Web site in the U.S. in October, with almost 23.5 million unique visitors, according to comScore Networks Inc. However, critics speculate that much of its popularity is due to the prevalence of copyrighted videos uploaded to the site without permission. They question how much YouTube's appeal will suffer as Google scrubs the site clean of pirated clips.
The deal with the NHL, announced Wednesday, is the first one YouTube has struck with a professional U.S. sports league. It calls for the league to provide YouTube with short video clips, including daily game highlights, during the 2006-2007 regular season. The NHL and Google will share advertising revenue.
The agreement also allows the NHL to participate in a YouTube program called "Claim Your Content" to monitor and control usage of its video clips. In addition, the NHL will have its own YouTube channel.
YouTube, founded in early 2005, seemingly came out of nowhere to become the leader in online video, edging out established players including Yahoo Inc., Microsoft Corp.'s Internet unit, AOL LLC and even Google.
Google, which announced its intention to purchase YouTube last month, plans to keep the site as a separate service from Google Video, which is similar to it.
