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GooTube Soiled by Its Own Mess

I've already commented today on one brand of conspicuous Google (Nasdaq: GOOG  ) non-evil, and noted its overblown reputation for innovation, when in fact it's mostly pursued acquisition. Now I'm back for a quick second helping.

Riddle me this, Google fans. Why do you suppose Viacom (NYSE: VIA  ) went with Yahoo! (NYSE: YHOO  ) for this major online advertising deal?

Think it could have had anything to do with Big Goo's habit of playing hardball regarding GooTube copyright infringement? By dragging its feet on copyright protection (by allegedly withholding that protection unless Viacom signed an extortionist's bargain), Google not only got itself sued, but it's talked itself right out of the running to do more business with one of the biggest media companies on the planet.

I'm sure the folks at Yahoo! are giggling at Google, but this really isn't much of a laughing matter. People use GooTube precisely because they can find whatever they want -- even though many of those sought-after clips violate someone else's copyright. Now we're seeing what a major liability that can be.

Let me be clear: I think my colleagues at the Fool who claim that illegally uploaded content played at GooTube is OK because it somehow pays content owners back via increased exposure are wrong. Dead wrong. Only people desperate for any exposure at all will find GooTube to be a winning proposition. (Think lonely teenage girls, both real and fake.)

Companies with production costs, existing brands, programs, and established distribution channels are simply being ripped off every time a random teenager with a TV card copies and uploads a show to GooTube. Increased exposure that brings traffic to Google doesn't necessarily pay back content owners one thin cent. (It might not make any money for Google shareholders, either -- something the press doesn't spend much time on).

But it's worse than that. GooTube's streamable video lets any number of other random lumps of protoplasm try and make money off content that was conceived and paid for by others.

Content owners realize this, and Viacom is leading the charge in taking back the position of power for bargaining these days. Today, we know that suing GooTube is only the beginning of the backlash. Smart media companies who don't want to hand over control of their brands to Eric Schmidt and his search engineers will do business with companies that not only reward them, but respect them.

By trying to bully its way into business deals for content it has no right to run in the first place, Google has proven that its costume change from "not evil" to evil is complete. It's also proven to be a pretty stupid business move.

Thank goodness CEO Eric Schmidt has sold more than a billion bucks worth of Google shares in the past year alone. At least we know he'll be fine, no matter how the whole increasingly evil and reviled thing turns out for outside shareholders.

Comments? Bring them here.

Yahoo! is a Stock Advisor recommendation.

At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.

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