Viacom - Lawsuit Business Model (Part II)

After, Eric Schmidt said that Google will vigorously fight Viacom's $1B lawsuit against YouTube, Sumner Redstone changed his tune saying, "The Google people are intelligent people. They can live peacefully with companies like Viacom." Why would Google even want to engage into an agreement on a dying businees model that will eventually kill Viacom? In fact Schmidt went on to say that, "Viacom is a company built on lawsuits ... look at their history". Schmidt also pointed to the fact that Viacom was currently being run by a former general counsel of the company, Philippe Dauman. Redstone confirmed to reporters of such when asked of Schmidts' comments, "We have engaged in a lot of litigation at Viacom, of which I have been a primary mover."

Why is litigation the cornerstone of Viacom's business model you ask? Simple, Viacom is getting squeezed by content producers and distributors. The traditional distrubtion channel for Viacom's product is shrinking. Users' are moving to more targeted and personalized mediums on the internet eg. YouTube. Technology has lowered the cost of production of content and there is more choice that ever and more competition for eyeballs. Viacom's is still operating under an old production and distribution structure which is bleeding the company. So the easiest thing to do is to blank others for your problems. Frankly, Viacom should be happy that users' are keeping its products alive by putting it on YouTube and introducing it to new audiences, who might end up watching it on TV thanks to YouTube.

See orginal post Viacom - Lawsuit Business Model (Part I)