The big media companies want to shut down your access to sites that host user-generated content (some of which might include their copyright content - like a Destiny's Child/Nirvana mash-up on YouTube).
In what the Electronic Frontier Foundation ("EFF") is calling a "bittersweet" victory - because VEOH, the prevailing party, has already been driven out of business by the costs of defending themselves against Universal Music Group ("UMG") - on Dec. 20th, 2011 the 9th Circuit Court dismissed UMG's claim that general awareness that one's site hosted some infringing videos is enough to deprive an online hosting service (in this case, VEOH) of the safe harbors of the Digital Millennium Copyright Act ("DMCA").
Basically, the safe harbors of the DMCA provide that services like VEOH cannot be held responsible for hosting infringing work - if the service promptly blocks access to allegedly infringing material or removes such material from their systems at the copyright holder's request.
The big content owners are unhappy that companies like VEOH and YouTube have "safe harbors." Big content owners want the power to shut down sites with offending content - especially offshore sites. That's why the big content companies are supporting a new law - the Stop Online Piracy Act ("SOPA") - that is currently being "marked-up" in Congress. SOPA would shut down access to what the big content companies call "offshore rogue sites."
At the same time that they are muscling SOPA through Congress, the big content companies are also pushing to expand their control over domestic sites - including taking services like VEOH to court for not doing enough to discourage "piracy."
Some of the sites that host user-generated content have chosen to fight back. Recently, Hotfile countersued, claiming that the big content companies have gone too far - abusing their powers under the DMCA by seeking to delete more files than they are entitled to.
The question of the limits of DMCA takedown power were at the center of a 2010 lawsuit where the United States District Court for the Southern District of New York rejected Viacom's claim that YouTube was guilty of massive copyright infringement. Instead, the court granted Google - YouTube's parent company- a motion for summary judgment and asserted that YouTube fully qualifies for "safe harbor" protections under the DMCA.
Even though they have suffered setbacks in the VEOH and YouTube court cases, the big media companies remain intent on turning the web into something that operates like television, "where nothing gets on the air until every clip is "cleared" by an army of lawyers."
This is not how the web currently works and (as the courts have consistently applied the DMCA) it is not how the law is supposed to work.
One year after the YouTube victory over Viacom in a lower court (Viacom is currently appealing that decision in the Second Circuit), VEOH has now triumphed over UMG in the Ninth Circuit. But the established Old World content owners are not done.
If they can't win on the merits in court under the existing law, the big content companies will lobby to change the law. Apparently, the big media companies want to make it unpleasant for any start-up anywhere in the world considering hosting or linking to user-generated content.
As reported by the EFF: "The cost of defending the [UMG] case effectively drove VEOH out of business years ago. If Hollywood manages to get Internet blacklist bills SOPA and PIPA passed, expect to see many more innovative startups meet the same sad fate - or never get off the ground in the first place."
Because the big content owners (like UMG, Viacom and the MPAA) are not satisfied with the DMCA, they have gone back to Congress seeking sweeping new powers to block access to offshore sites that might be hosting pirated content. And the new law also contains provisions that would criminalize domestic sites that link to such foreign sites.
The big content owners have been fighting to protect their 20th Century business models - and (even now that that the model of selling physical copies for home use is clearly dead) UMG, Viacom and the MPAA are unwilling to adapt. Instead of embracing innovation and new business models, the big content owners are using their massive influence in Congress and their legions of lawyers to manipulate things to punish the New World innovators. As the EFF observed after the VEOH decision: "UMG will doubtless claim that this [VEOH] decision is why it needs more arrows in its online enforcement quiver." New arrows like the overbroad and innovation-killing law currently working it's way through Congress - SOPA.