Inside YouTube’s complex, crazy German court defeat

Google (s GOOG) says it’s determined to “find a solution” to YouTube’s German difficulties, after the country’s music rights collection society GEMA won a lawsuit against the web giant.

But understanding what exactly it’s trying to find a solution for takes some explaining — largely because the suit appears to have been more of a negotiating tactic than anything else. One thing’s for sure: it doesn’t make YouTube any less broken in Germany, for now at least.

Here’s how it all started.

In 2010, GEMA and YouTube were trying to negotiate how much YouTube should pay in royalties for the copyrighted music videos on the platform. YouTube was willing to cough up 10.25 percent of the net ad revenue it generated in Germany, which GEMA would then (mostly) redistribute to the artists.

However, GEMA also wanted a whopping 12 euro cents ($0.16) per stream. Google said no, GEMA sued, the negotiations were abandoned and, as a result, most major-label videos have been blocked on YouTube Germany for the last two years.

The suit was a test case, covering 12 copyrighted songs — five of which were dropped from the case early on — that had been uploaded to YouTube without the rights holders’ permission. On Friday, the Hamburg regional court said YouTube had to take the remaining seven songs down, but it also imposed certain future conditions on the platform.

In future, the court said, YouTube has to check all titles and descriptions for uploaded videos to see whether they might be for copyrighted material.

But now here comes the weird bit: the court also wants YouTube to use its own Content ID system to flag up videos that are copies of copyrighted material, whether or not rightsholders have complained.

That’s an inversion of the current system, which relies on rights holders uploading their own content to the system so that it can create digital fingerprints to recognize copies so that they can be either blocked or monetized. Now YouTube is supposed to monitor this stuff itself and decide whether there is infringement, rather than let the owners take responsibility.

We have already said this is not possible because we don’t know exactly what rights GEMA has for all the music content,” YouTube spokeswoman Mounira Latrache told me. “This is against any platform which uses user-generated content.”

Keyword filtering is also a lousy idea, Latrache said, because it frequently results in false positives. “It would be a bad solution for the musicians themselves because it would block things that were not meant to be blocked,” she said.

Of course, GEMA thinks the result was great.

“We reached our primary goal one hundred percent, to have the court confirm that YouTube is fundamentally responsible for videos posted by users,” GEMA chairman Harald Heker said.

(Conversely, Google points out that the verdict defined YouTube as a hosting provider not a content provider, which actually makes it less liable for everything that goes on on its platform.)

Heker also said in a Monday interview with Der Spiegel that “YouTube will either introduce these safeguards on its own, or finally sit down with us again at the negotiating table, so we can conclude a clean contract.”

Nobody wins

So what happens now? Hard to tell. Google can appeal, and probably will, although it’s not given any indication of this yet.

GEMA dropped its maximum per-stream charge to 0.6 euro cents last December, and it still wants that 10.25 percent ad revenue cut as well. Google says the 0.6c rate came from negotiations with download services such as iTunes, making it inappropriate for YouTube.

“We have to speak to GEMA again, but we don’t agree on the 0.6c because it’s far too high and does not fit with our business model because we’re not a download provider,” Latrache told me.

At least negotiations can resume now that the suit’s over (if it really is over), but it doesn’t look like anybody’s willing to budge yet. The result? Germans shun their broken YouTube for licensed rival services, or turn to semi-legal proxies to unblock its videos.

You couldn’t find a more perfect example of the copyright-vs-technology dilemma, and the capacity of everyone involved to shoot themselves in the foot, if you tried.