Big Media-Backed Veoh Sues Big Media, Blogs Go Nuts

We'd love a smart attorney's take on this strategy from video site Veoh, which filed suit today against Universal Music: It asked a federal court to declare that isn't violating Universal's copyright and that Universal can't get an injunction against Veoh for any copyright violations that happen to be up on the site.

Our layman's take -- this is a PR stunt that's certain to win Veoh a lot of love in the blogosphere. Sort of like this: "SMACKDOWN," declares Mashable. And this, from TechCrunch's Michael Arrington: "Perhaps new Veoh CEO Steve Mitgang is the kind of guy you don’t want to try to intimidate. He just called me to say that Universal Music made one too many threats to sue his company."

Universal's response, via an email release:

Universal Music Group is enthusiastic about using technology to build communities, as evidenced by our deal with YouTube. But that's not what Veoh is all about. Rather, it’s about trying to build a business on the backs of our artists and songwriters without fairly compensating them for the use of their works. It is perpetuating a disservice to the entire creative community. So-called 'innovation' that breaks the law and chooses to violate the rights of content creators is not innovation at all.

The backstory is that Universal CEO Doug Morris, who runs the world's biggest music company, has been using whatever leverage he can to extract payments out of social network/media-sharing sites: He's publicly threatened YouTube with a lawsuit and is currently in court with MySpace. He's also wrung concessions out of a host of smaller players, including Bolt, which he did take to court before getting a settlement.

Both Universal and Veoh acknowledge that both sides had been in negotiations, so in the end this seems like a simple dispute over pricing and terms -- a micro version of the Viacom-Google fight. The most interesting twist is that the lawsuit comes a day after Veoh completed a $25 million third round of financing from sophisticated players like former Viacom execs Tom Freston and Jonathan Dolgen; it already had backing from the likes of Mike Eisner and Time Warner. Again, hard to argue that Mike Eisner is really trying to stick it to the man. But that won't stop the Web commentariat from doing so.