p2pnet view Movies:- Veoh is dead. Big deal.

Well, to Time Warner, Michael Eisner’s Tornante Company, Spark Capital, Shelter Capital Partners, Tom Freston’s Firefly3 LLC, Jonathan Dolgen (former chairman of Viacom Entertainment Group), Intel, and Goldman Sachs, it is.

They are or, rather, they were, major investors to the tune of $70 million in original venture capital. And by now, it has to be a lot more than that.

Launched in 2004, the video-sharing site is closing and will “liquidate under bankruptcy protection”, says the Wall Street Journal.

“The site, which had tried for years to carve out a niche by offering both user-generated content and professional shows, was eclipsed by rivals like Google Inc.’s YouTube and Apple Inc.’s iTunes”, says the WSJ.

A spokesperson for Veoh “didn’t immediately return a call seeking comment”, it adds.

Says Mike Masnick on Techdirt >>>

Veoh was one of a number of online video YouTube-wannabes that, despite being connected to Michael Eisner and raising money from Time Warner and Goldman Sachs, never got very much actual traction… and… got tangled up in a lawsuit with Universal Music pretty quickly over alleged copyright infringement, despite Veoh abiding by the DMCA. Every single step of the way, Veoh basically won big in the lawsuit. Time and time again, every trick that Universal Music tried — including suing Veoh’s investors directly, was rejected by the judge, and the final ruling late last year was that Veoh abided by the DMCA and was protected by its safe harbors from Universal Music’s lawsuit. It was a complete victory.

The only problem? Veoh spent a lot of time, money and effort on this lawsuit, and no one was using Veoh.

With the company in the dust, “I’m not quite sure what this would mean for Universal’s appeal in the lawsuit”, says Techdirt.

“While the company was a total flop, the district court ruling last year set a very important precedent in clearly stating that the DMCA’s safe harbors did protect such sites (like YouTube) as long as they complied with the takedown process. Without a company to continue fighting what happens to the appeal?”

Veoh “won another victory under the DMCA safe harbors, this time against Universal Music Group (UMG),” said Fred von Lohmann in the EFF’s Deep Links, last year, continuing »»»

The ruling should put to rest the argument that transcoding and other activities necessary for making content accessible on the web are not covered by the DMCA’s Section 512(c) safe harbor for storing material on behalf of users (i.e., hosting user-generated content). This is good news not just for Veoh, but also for YouTube and every other site that hosts material uploaded by users.

Like many other companies that host content on behalf of users, Veoh has been bedeviled by copyright lawsuits. The copyright owners make the same argument in each of these suits: the hosting service should be liable for every infringing bit uploaded by naughty users and responsible for the full cost of policing for infringement. Fortunately, Congress enacted the DMCA’s safe harbor provisions back in 1998 to protect service providers from exactly these risks, offering immunity from copyright damages to those who implement a notice-and-takedown system. In August 2008, Veoh won a big victory against adult video purveyor Io Group, relying on these provisions.

Veoh’s latest victory was against UMG, which sued Veoh because Veoh users allegedly uploaded UMG music videos without authorization. The issue before the court was whether the DMCA safe harbor for hosting only covers the actual act of storing bits on a server, or whether it also covers related activities, such as:

1. automatically transcoding video files uploaded by users into Flash format;
2. automatically creating copies of uploaded video files that are comprised of smaller chunks of the original file;
3. allowing users to access uploaded videos via streaming;
4. allowing users to access uploaded videos by downloading whole video files.

Relying on the statutory language, as well as the legislative history, the court concluded that all of these activities are covered by the DMCA Section 512(c) safe harbor. Lots of online service providers will greet this ruling with relief. If the court had accepted UMG’s arguments, every web host would lose the safe harbor as soon as it made web pages available to the public. The ruling should also help YouTube in its ongoing battle with Viacom, which also turns on the continuing strength of the DMCA safe harbors.

But the Veoh ruling also points out a surprising irony: while YouTube and Viacom are fighting their interminable litigation trench war, many interesting DMCA legal questions are being resolved in smaller, faster-moving cases involving companies like Veoh. At this rate, the highly-anticipated Viacom v. YouTube lawsuit may end up a footnote in the legal fights that define the rules governing user-generated content.

On Recording Industry vs The People, Ray Beckerman sums it up like this:

“The litigious UMG Recordings has succeeded in shutting the doors of a competitor by bringing a frivolous lawsuit against Veoh, and losing. But apparently the drain of the lawsuit caused the startup to fail.”

It “truly is dog-eat-dog in the venal universe occupied by corporate entertainment industry interests”, said p2pnet at the time.

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Wall Street Journal – Veoh Networks to Liquidate, February 11, 2010
Techdirt – Veoh Shuts Down; What Happens To The Lawsuit?, February 11, 2010
Deep Links – UMG v. Veoh: Another Victory for Web 2.0, January 5, 2009
p2pnet – Victory for Veoh vs UMG, January 7, 2009
Recording Industry vs The People – Despite beating UMG in the frivolous case it brought, Veoh has to close its doors, February 11, 2010