News Corp's MySpace Finds a Way to Profit from Copyrighted Content

News Corp (NWS) got a great deal when it snapped up social network MySpace for $580 million, but only now is it tackling an issue that should allow it to profit from a lot of the video posted on its site. Instead of pulling down copyright-protected videos from its members' profile pages, MySpace will give the content creators a share of the revenue from ads it will start posting on uploaded content.

This is possible thanks to a company called Auditude which scans uploaded videos and compares the content in its one billion-minute plus library. If an ad contains professional content, Auditude inserts an ad, and MySpace splits the ad revenue with the content creator. In the past MySpace just removed or banned videos if the included copyrighted material, based on its own scanning software.

Viacom's (VIA) MTV Networks is the first content creator to test the system with clips from its networks including MTV and Comedy Central that are popular with MySpace's demographic. Viacom is pleased to get a new revenue stream from ads attached to its content, and happy to allow consumers to share their videos. Of course it was also Viacom that was livid that Google's (GOOG) YouTube allowed consumers to upload its videos illegally, with Viacom's $1 billion lawsuit against Google still pending. Now YouTube has a similar strategy which identifies video clips and offers a content creators a choice between removing the material and sharing the revenue from ads placed on it. YouTube also has deals with a number of content providers to post clips of its content and just made a deal with CBS to show full length episodes of some of its shows.

This is a crucial step for the old media giants who still create the vast majority of entertainment content to make their content available in a social network environment, without their copyright being violated. And perhaps it is even more important for the media companies struggling with a entertainment environment shifting towards digital distribution and with lower ad sales, with a new revenue stream.