I wrote previously about the lawsuit YouTube faces for showing copyrighted video clips of Robert Tur’s 1992 LA riot footage. This week’s BusinessWeek (Aug 7, 2006) addresses the revenue generating concerns.

As I mentioned previously, most lawyers seem to agree that YouTube is protected by copyright law as long as it responds to the copyright owners’ requests to remove their content. A side question seems to be whether it’s ok to run advertising beside the videos.

[YouTube] entered uncharged territory when it recently began adding ads next to search results. The law prohibits a site from benefiting financially from infringement, but the company argues that it’s protected since it doesn’t sell ads against the individual videos. Still, the courts haven’t set clear boundaries. “There has to be some way to make money with advertising that doesn’t deprive you of the safe harbor. But where that line is, no one really knows,” says Fred von Lohmann, a lawyer for the Electronic Frontier Foundation.

Amateur video creators also seem to have a love/loathe relationship with the site. Some have been turning to sites that share ad revenues with them - like Revver - rather than uploading to YouTube to make money off their efforts.

Still, with 65,000 video clips uploaded and 100 million watched daily, YouTube has become the online media center for the web. BusinessWeek reports that it accounts for 60% of all videos watched online, which makes it a prime candidate to promote videos legitimately as well as a huge target for infringement. NBC and E! have been working with YouTube to promote specific clips, but NBC also has set up communication with the site to remove copyrighted clips more quickly.