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What YouTube's reported acquisition of Twitch could mean for broadcasters and copyright

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Last weekend, reports began circulating that Google-owned YouTube would purchase broadcasting and livestreaming platform Twitch for $1 billion.

Variety reported the all-cash offer will be announced "imminently," while The Wall Street Journal stated closure on the deal would not be immediate, as talks are still "at an early stage." A report from The Verge stated Twitch courted multiple bids from potential buyers including Microsoft, but ultimately decided on YouTube because it believes Google's video service would be the best fit to help Twitch become the definitive video game streaming platform. Despite multiple sources reporting the deal in various states of progress, everyone still had the same question: What would this mean for both platform's copyright policies?

Twitch and YouTube users have also expressed reservations about the potential acquisition, many of which center around the different ways Twitch and YouTube handle copyright claims and how that might affect broadcasters.

In the wake of the reports, Polygon examined each company's copyright infringement practices and their legal underpinnings. We also spoke with broadcasters about what the potential merger could mean for them, both good and bad. Twitch and YouTube declined to comment.

Twitch's approach to copyrighted material

Twitch's latest available statistics tout 45 million unique monthly viewers worldwide, which reflects a tripling of users in 2013. According to Twitch, viewers watch as much as 95 minutes a day. As of February 2013 — before the service was available on PlayStation 4 and Xbox One — Twitch counted more than 600,000 unique monthly broadcasters.

How does the company deal with the inevitability of claims from copyright holders? Twitch believes its copyright protection policy to be compliant with the Digital Millennium Copyright Act. Passed in 1998, the legislation expanded federal copyright law to encompass digital materials and provided protection from liability to institutions like internet service providers whose users may infringe on copyrighted material.

Perhaps the most notable example of a company claiming DMCA protection against its users' content was Napster, the peer-to-peer file sharing service. In the early 2000s, the company argued that it was entitled to protection, in part because it did not directly provide copyrighted materials to users and should not be held responsible for the actions of those users. The record industry (including companies like A&M Records, Geffen Records and Sony Music Entertainment) filed suit, arguing that the files that Napster users traded contained copyrighted material, and Napster should be held accountable for failing to stop those transfers.

The U.S. Ninth Circuit Court of Appeals upheld a ruling against Napster, stating in 2001 that "if a computer system operator learns of specific infringing material available on his system and fails to purge such material from the system, the operator knows of and contributes to direct infringement. … Conversely, absent any specific information which identifies infringing activity, a computer system operator cannot be liable for contributory infringement merely because the structure of the system allows for the exchange of copyrighted material." Napster ceased to operate as a P2P file sharing service in the decision's wake.

In short, providers can be held responsible for what they know of and fail to remove but not of what they don't know of. Twitch's policy provides a mechanism by which the company can learn of copyright violations from copyright holders, investigate the claims and comply with DMCA laws as applicable.

"Please note that since we respect game designer, game publisher and other Content … owner rights, it is Twitch’s policy to respond to notices of alleged infringement that comply with the Digital Millennium Copyright Act (the 'DMCA')," section 7, Digital Millennium Copyright Act, in Twitch's Terms of Service reads.

Twitch's Terms of Service directly references the DMCA — specifically 17 U.S.C. Section 512(c)(3), with which companies must comply to receive protection — and provides a method for copyright holders to notify the company of infringement.

"It is our policy to respond to clear notices of alleged copyright infringement that comply with the Digital Millennium Copyright Act," Twitch's Digital Millennium Copyright Act Notification Guidelines state. "In addition, we will promptly terminate without notice the accounts of those determined by us to be 'repeat infringers.'"

In both the Terms of Service and the Guidelines, Twitch calls out "repeat infringers," users who have "been notified by Twitch of infringing activity violations more than twice and/or who [have] had their Broadcaster Content or any other user-submitted content removed from the Twitch Service more than twice."

Twitch policy states that the company will "promptly terminate without notice" users who fall within these guidelines.

YouTube's approach to copyrighted material

Unlike Twitch, which leaves it up to copyright holders to inform the company of potential infringement, YouTube's approach is more proactive.

YouTube’s policies deal with two kinds of copyright claims: those made with the automated Content ID program and complete legal requests sent by copyright owners, known as copyright strikes. In both cases, copyright owners are the sole arbiters of who can reuse their original material, which includes "music, movies, TV shows, video games, or other copyright-protected material," according to YouTube’s Content ID policy statement. YouTube also defines "fair use" of these materials to include remixes, criticism, news reports and other non-commercial use that does not interfere with the copyright owner’s ability to make money off the copyrighted material.

Additionally, users can obtain Creative Commons licenses providing a blanket standard for allowing others to use their content. Typically this involves displaying source videos on the same page as the uploader’s content utilizing the copyrighted material. An example of this would be placing an original clip on a page below a user-created video remixing footage from the clip. In other cases, copyright owners allow the use of their content in videos in exchange for uploaders sticking ads on the videos.

With regards to Content ID, the program will flag copyrighted material — mostly music — and issue the uploader a claim. YouTube users can then acknowledge or dispute the claim, share video revenue or remove/swap music used in the video if the claim is for music.

For legal requests, it’s more complicated. If copyright owners send a complete legal request, the video is taken down immediately and the uploader receives a copyright strike, which affects account standing and limits access to certain YouTube features. Copyright strikes can be fought by uploaders, but this is almost always unsuccessful.

In short, Content ID claims can be fixed by the video’s uploader acknowledging that the video contains copyrighted material, or swapping some music out for another tune. But legal requests are more complicated and are a bigger risk for uploaders to take if they choose to fight them.

YouTube's evolving policy

Late last year, YouTube set off a controversy, particularly within the gaming community, when it changed its policies on multi-channel networks, or MCNs.

MCNs — Machinima is a well known one — are umbrella presences that curate and promote several YouTube channels — in some cases, hundreds or thousands — and taking a percentage of the advertising revenue they generate. The ostensible benefit to a YouTube broadcaster is increased traffic and exposure. Until December, it also meant being shielded from the bots that crawl YouTube looking for copyrighted material and flagging videos with them, because the MCN was, in effect, vouching for all of its affiliates' compliance.

YouTube revoked that protection for a certain class of affiliate in December, which effectively meant all but a handful of an MCN's biggest and best channels would be shielded from bots. Critics of MCNs said YouTube took that step because MCNs were not properly managing their relationships with their rank-and-file affiliates and not monitoring their use of copyrighted material appropriately.

In any case, a wide swath of YouTube broadcasters found themselves with some of their most popular videos flagged for unauthorized use of copyrighted material, typically when the YouTube bots detected a song that was fully licensed to appear in a video game. These flags effectively converted the video's advertising to the rights holder until the dispute was resolved. Many affiliates complained the dispute process was complicated, rights holders were unreachable or wouldn't follow up, and managing dozens of claims took large chunks of time away from their livelihoods.

Though many gamers and broadcasters, mindful of this, have wondered if live-streamed play sessions, or archives of them, will clash with YouTube's handling of copyrighted material, it's unclear how YouTube's policies on MCNs would affect a Twitch acquisition.

Advertisements play when users sign in and start watching Twitch broadcasts, and there are advertisements on a channel's page, but a lot of popular channels offer subscriptions as a way for fans to support streamers they enjoy. Then there's the question of whether or how YouTube's bots could monitor live broadcasts. Assuming they could, what would happen if they found a stream in progress to be playing someone else's copyrighted work — an excerpt from a film, or a song in a soundtrack — also is unknown.

Broadcasters react

YouTube user John "TotalBiscuit" Bain says he's concerned that the acquisition could create a "pseudo-monopoly" that could harm broadcasters.

"While there is the potential that an acquisition of Twitch by Google could legitimize video-game content, in particular long-form Let's Play or 'quick-look' style unedited critique, I fear that such a merger would create a very strong pseudo-monopoly in the gaming video market that would be very hard to compete with," Bain told Polygon.

Identifying copyrighted material is problematic on both platforms, he said, and wouldn't obviously be solved through the acquisition.

"Both YouTube and Twitch already have significant problems such as wrestling with the issue of content ID and poor monetization rates," Bain said. "I see a merger as more likely to compound those issues and more besides, rather than improve either service for those creating gaming content. Up to this point I've been happy to use both YouTube and Twitch as separate services with separate purposes and I am concerned that a merger could end up being extremely disruptive to both.

"What it's going to do is very quickly shine a light on the murky nature of what a lot of streamers on Twitch do in regards to using content that doesn't belong to them. Considering YouTube's ham-fisted approach to fair use and its frequently inaccurate automated Content ID system, I doubt any tightening up of the rules for streaming on Twitch would be without a lot of collateral damage to innocent content producers."

Bain also expanded on his views in a YouTube video.

Broadcaster Daniel "Figcoinc" Figueroa sees several possibilities, potentially positive and negative.

"The acquisition of Twitch by YouTube is a very smart business tactic on the part of YouTube," Figueroa told Polygon. "YouTube for little over a two years now has marketed their ability to stream through their website, but has obtained very little mass-market appeal in comparison to sites like Twitch. It is no secret that the gaming side of YouTube is one of the fastest growing, and most popular sections of YouTube. This has brought YouTube a lot of issues in regard to copyright, but in turn has granted tremendous ad revenue.

"Twitch has garnered tremendous growth, but it is very evident that funding is a major weakness for the website. They just do not have the funding to accommodate the growth. This is a very similar to YouTube prior to the acquisition by Google.

"These two things combined make for a very tempting opportunity for both companies to gain exactly what they want. Twitch obtains the funding needed to improve the growth of the website, and YouTube obtains the live streaming audience they wish to invest in. On the business side of things, they both win."

In the short term, Figueroa doesn't see a problem for streamers. That may change in the longterm, he said.

"The current YouTube Content ID system has had issues in the past. Issues with false flagging of content, inability to properly claim content as fair use, and many other issues. This will really impact streams that play music in the background, or play games that use music controlled by record labels that are known to be very strict in Content ID claims. I think beyond anything else, that is the real concern for content creators that use one or both platforms."

Lars Doucet, co-founder of Level Up Labs and head of non-profit WhoLetsPlay, which was created to help Let's Play creators with the copyright process, believes that if the deal goes through, it meansTwitch could have more resources. And if Twitch has more resources, this could improve technical aspects of the platform. But on the other hand, Google's lawyers will likely impose the same or similar IP restrictions on Twitch that have been applied to YouTube. And both YouTube and Twitch will lose the chief incentive to improve their services: competition.

"Whenever the latest controversy with YouTube hits, there's a sudden panic among the YouTube and games community, all our media channels light up with 'what are we going to do?' chatter, WhoLetsPlay gets a lot of attention for about a week or so ... and then everybody kind of forgets about the issue and moves on while the underlying problems remain unsolved," Doucet told Polygon. "And I understand that pattern because I find myself falling into it, too.

"That said, the chief problems here are the continuous erosion of the Fair Use doctrine and YouTube always giving the benefit of the doubt to the capricious demands of the IP overlords," he added. "The most troubling aspect to me is when a developers' own videos are taken down on spurious claims, because the burden of proof is entirely on the accused, not the accuser.

"The potential Twitch/YouTube merger troubles me, because Twitch was YouTube's main competition, and so far has had a better record on IP takedowns and Fair Use."

Alexa Ray Corriea and Owen Good contributed to this report.