Google’s $500 M. budget for defending YouTube?

The wave of rumours flooded the IT community, and the player everybody talks about right now isn’t anyone smaller than Google with his new acquired videosharing portal YouTube. Google Inc Chief Executive Eric Schmidt on Tuesday denied a widely circulated rumour that his company had set aside $500 million to settle copyright claims by media companies as part of its deal to acquire video-sharing site YouTube Inc. Speaking to more than 500 Internet industry insiders at the annual Web 2.0 Summit, Schmidt said an anonymous blog post asserting YouTube has reserved $500 million for legal claims, out of the $1.65 billion take-over price, was “not true.” Web and sports entrepreneur Mark Cuban, an outspoken critic of the Google-YouTube deal, late last month posted a claim from an anonymous blogger that he had inside information on the secret reserve plan.

In a two-part question, Battelle, organizer of Web 2.0 Converence in San Francisco, asked whether Google’s deal included a secret reserve for legal claims and, secondly, what progress Google was making in striking licensing deals with media companies to avoid threats of legal action. “The former is not true,” Schmidt said in response to the question of whether a “very large sum of money was set aside to buy peace” between YouTube and big media companies. “The latter is,” the Google CEO continued. “We have visited as many media companies as we can” to reach copyright licensing deals that can insulate both YouTube and Google, he said. Television and video producers, along with music labels, are angry that pirated versions of their copyright programming are frequently posted by people to YouTube’s site and have become a prime attraction of the video site. We all know YouTube is full of licensed, but is there someone who wants to start the war?