The big YouTube payoff.

From Mark Cuban’s blog, some intimate details on the Google YouTube Deal. This analysis is interesting because, according to Cuban’s informant, as much as $500 million of the $1.62 billion deal may have been set aside to pay off copyright infringement claims.

But here’s the really interesting part: As part of the deal, Google may have struck side deals with copyright holders (movie studios and record labels) so they will refrain from suing YouTube for a few months in order to build Google Video / YouTube’s market share. In fact, the studios may even be suing competitors in order to indirectly help YouTube. At the end of 6 months or so, YouTube — now totally dominating the market — will go legit, remove or license any remaining copyrighted content, and compensate the movie studios with Google stock — from which, incidentally, they won’t have to pay royalties to their artists. If it’s true, this is a fiendishly clever and borderline ethical deal. If I were any of the 200 or so other video-sharing sites, I’d be real pissed right now.

The public usually doesn’t get an inside look at how deals like this are structured. We may never get a good look at the side deals in this case, because Google is so huge that they can legitimately claim that a $50 million side deal is not significant enough to warrant reporting in detail in their next SEC filing. “Don’t be evil?” I think this is the last time anyone will take that marketing slogan / motto seriously.

Please note I have not verified any of the info above. I welcome insight and amplifications.

The big YouTube payoff.