Neutrality Rules Would Cripple Media Industry, Says Viacom CEO

Dauman’s seems to be Viacom’s first public statement against net neutrality. NBC Universal has taken the lead among media companies, with an FCC filing against neutrality that went even further, asking that ISPs be required to use piracy filters (CD June 20 p8).

“Highly snackable” short-form material such as The Daily Show, Colbert Report and “classics” like Beavis and Butt- head, all properties of Viacom’s MTV Networks, are pirated heavily, Dauman said. Swedish P2P site The Pirate Bay gets movies that on average cost $66 million to make and $35 million to market and posts them online even before they hit theaters, he said. Fair-use fighters can’t claim freedom of expression for most content that’s floating around, because it’s in “unmodified, uninterrupted form,” with a hosting or linking Web site making money by running ads with the material. Viacom’s licensing agreements are “eviscerated” when partners question why they should pay for content freely available online, he said. A “vocal cadre” of academics and activists is making the case that copyright “locks up” culture but it really “unlocks new ideas,” he said.

Viacom is not among “media holdouts” from the Internet, Dauman said. The company even uses virtual worlds to spread content through “every nook and cranny of the Internet,” he said. The leading supplier of video to mobile devices, it offers 300 authorized content sites for fans, giving Viacom the top Internet portfolio among entertainment companies, he said. It has no problem with consumers’ paying “indirectly” for content via advertising. Viacom licenses video to Joost and has created its own social network, Flux, on which fans can remix content and share it across a network of publishers, to build a “cohesive experience across all our brands.” Its content has aided an entire “ecosystem” of products from high-def TVs to movie download sites, Dauman said.

Dauman left no doubt that Viacom will stand among players on congressional and FCC policy on networks. Media companies’ success is bound up with service providers’ freedom to run their networks, he said. “It would be easy if we had the tools to identify and root out” piracy on the Internet, he said. “It is obviously impossible to check every computer and look over the shoulder of every user to see if they have a license,” and that makes service providers key to protecting copyright. “We don’t ask for perfection,” just that ISPs “do something about it,” as some cable operators do, warning users known to download illicitly, Dauman said. Some ISPs in Europe are making more decisions about the material crossing their networks, he added.

The government must let “free market principles” work for network operators, without regulatory intervention, Dauman said, alluding to net neutrality, though he never used the term. Plans by AT&T and others to use network tools to track piracy is a “factor that weighs against heavier regulation in that sector,” he said. Service providers and others must act “responsibly,” integrating antipiracy tools into their products and educating consumers on copyright, he said. “After all, you want your own intellectual property protected also.”

“The good news is this: We're in a better place than we were last year,” Dauman said. “A consensus is developing” between content and distribution industries. YouTube aside, most technology companies and Web sites are “receptive” to Viacom’s pleas, he said. He cited Microsoft and MySpace as having adopted identification technology to flag pirated content. Dauman said Viacom’s YouTube suit generated many supportive calls from nonmedia executives, showing that piracy is a concern beyond its field. Because of “pressure from Congress and other constituencies,” colleges are identifying students who illicitly share content, he said, referring to the Recording Industry Association of America and its lawsuit and settlement campaigns against students.

International enforcement is a crapshoot, Dauman said. Trade meetings with China often evoke a “sudden burst of enforcement… just for show,” he said. Governments can best help by fitting trade pacts with strong IP provisions when dealing with countries that have serial enforcement problems, he said. At home, let the market work, Dauman said. “We don’t need to meddle in many cases with the market dynamics out there.” Content producers can be innovative, he said. “We must all take necessary risks to follow our consumers to any medium they want, whenever and wherever they want it.”