It could be said that from the moment Universal Music brought its lawsuit against the company its fate was sealed. And so it has come to pass, with Veoh laying off its staff and filing for bankruptcy. Another fledgling video site bites the dust.
Veoh’s Bright Beginning
began life in 2005 before entering beta in 2006. Founded by Dmityr Shapiro, the company made the headlines when Michael Eisner, former Disney chairman, joined the board. And he was one of the big-name investors alongside Time Warner and Goldman Sachs.
Veoh was talked about in the same vein as YouTube, offering a mix of user-generated content and premium content. Veoh’s goal was simple: to aid the viewing of video content and the uploading of video from ordinary people.
But things soon turned sour.
UMG DMCA Lawsuit
In September 2004, Universal Music Group filed a lawsuit against Veoh alleging that copyright infringing videos were present on the site. However, Veoh was playing by the rules, removing videos found to be infringing copyright.
UMG’s reasoning for why Veoh wasn’t protected under the DMCA Safe Harbor provision was that in converting the files into the Flash format they were republishing the content and therefore wholly responsible for it.
The judge disagreed with UMG’s arguments at every turn, last year issuing a summary judgment in Veoh’s favor.
Veoh’s Dismal Ending
Unfortunately the case took a lot out of Veoh, costing it a lot of money, hitting the confidence of management and staff alike, and dissuading investors from working with the company.
Veoh limped on, changing strategy and laying off staff in an attempt to right the ship. But traffic slumped and Veoh let go of its remaining workforce on Wednesday. It is now preparing to file for Chapter 7 bankruptcy.
Shapiro confirmed the already-rumored news in a heartfelt but ultimately positive blog post yesterday.
Conclusions
It’s a real shame to see Veoh go out this way, but the writing has been on the wall for a while now. What the company has left the industry with is an important legal precedent derived from its victory over Universal.
