The Wed dismissal of online video site Veoh’s copyright lawsuit against Io Group may seem on the surface no more than a blip in the world of the Digital Millennium Copyright Act. After all, Veoh and adult entertainment outfit Io Group aren’t exactly household names in the big media and/or cable content universe. But the case could have implications for big content owners, which have struggled to develop business plans and, in some cases, decide when to sue over the unauthorized use of their video content. Viacom, for example, is famously embroiled in a legal dispute with Google’s YouTube over use of clips from Comedy Central’s “The Daily Show” and other Viacom fare. The Veoh decision—which basically found that Veoh can’t be held liable for users’ copyright violations when it has no direct knowledge of said violations (although under the DMCA, it must take them down if alerted by the content owner)—could be seen as bolstering YouTube’s similar arguments that it can’t police everything on its video sharing site. Google almost immediately put out a statement lauding the ruling.

Of course, let’s remember that this is one U.S. District Court judge in San Jose, so the ruling is relatively low-level and subject to appeals that could eventually reach the U.S. Supreme Court. The battle is far from over. Still, Viacom’s suit against Google has just been hanging out there for years, casting a dark shadow over video sharing sites perhaps, but not seriously hindering anyone who truly wants to trade copyrighted content through underground channels. Meanwhile, Viacom has aggressively worked to beef up its own branded cable net sites—especially the MTV and Comedy Central brands—with healthy doses of video from its most popular shows. Disney’s also doing its own thing, and NBCU and News Corp are working together on Hulu.

In the end, the fight really comes down to control and who has it: Content owners or consumers? Camps from both sides would argue their own supremacy, with big media trumpeting copyright law and consumers trumpeting, well… the inevitable march of P2P technology that makes it almost impossible to effectively police piracy. But the current strategy of big cable brands—essentially to pro-actively get the video out there on their own terms (ie, with embedded ads and the like) before “fans” start trading them underground—is probably the best way to attack the situation. The interplay between linear and on-demand viewing continues to have its benefits, as well as its potential downsides such as the rise of ad-skipping. The Veoh decision is just the latest chapter in a very long novel. And no one knows how the story will end.

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