Tuesday, April 05, 2016

"Video Games" YouTube Channel In Court

The legalities of YouTube are always a touchy subject. Whether it's muting soundtracks for copyright violations (even when no revenue is in place for the channel), or requiring content creators to sign up for YouTube Red, the ever-changing rules can be a minefield.

Which has nothing to do with today's story, but I wanted to post that friendly reminder about how much YouTube can suck at times.

A Dallas jury ruled on April 1st (and no that is not a joke) that two of the creators behind the YouTube channel Video Games were in breach of contract, and ordered to pay $20.3 million dollars. Two investors, David T. Moss and Brandon Keating, initially gave $1500 to help cover the channel's start-up costs, with a promise of 30% of stake in the business and 30% of the profits. The $20 million is almost 6800% of a return on that initial investment, over a 4 year period. Wow.

According to court documents, the prosecution claims that Marko Princip and Brian Martin, the founders of the channel, conspired to commit fraud and not keep their contractual commitments with the two investors. Essentially, they never paid a cent to investors. Nor did they include them on important company decisions that could alter the face of the business. Princip and Martin argued that the investors backed out of the contract and final papers were not signed. Though they kept the $3000. There also seems to be a claim by the YouTube channel creators that they don't make enough money. With 3 million plus subscribers, that's difficult to believe.

I'm making the assumption since the crux of the decision was based on the channel's advertising revenue. The channel has received 813 million clicks over the 4 year period, and the page was paid $3 for every 1,000 clicks in ad revenue (or $2.439 million overall). While the fine is a bit excessive, the figures were based off of potential future earnings for the channel. The plaintiffs will be awarded 60% of the $2.439 ad revenue, $1.5 million in future earnings, and $16 million in punitive damages. Which means a ton of begging to fans to help meet those numbers.

As more entertainment content moves online, cases like these are going to start cropping up. Even with a YouTube channel, if you have investors or have made agreements on what they own or can get in return, you better be faithful to those terms. YouTube is big business. Stick to the law and you should be safe...from the most part. Content and copyright infringement is still a grey, ambiguous area.

But of course this story can't end with bygones being bygones. In a dick move that any gamer is all too familiar with, Martin was a sore loser. On Friday he sent out a Tweet through his account asking people to upload pornographic content to the YouTube channel. Unfortunately the tweet has since been deleted, but clearly enough people caught it that a judge forced Martin and his attorney back into court on Tuesday to clear up the issue. Without knowing the full details, it's hard to say what Martin's plan was. Maybe it was to try and tank the channel, get it pulled from YouTube so that they have no way to pay the money to the investors? Maybe it was to devalue the content of the channel - again so they don't have to pay. Whatever the reason, the judge ruled that "the parties to do nothing to harm the channel or its value." Given Princip and Martin's past transgressions with botting and content violation, somehow this is not surprising.


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