Google sent an email to anyone who purchased or rented digital videos on Google Video explaining, in a nutshell, that the service will be shut down and that videos will no longer be viewable.  Google initially offered affected users up to US $10 in credit for use on its affiliated e-commerce sites, but only if the user purchases at least that amount, and only for 60 days.  The ensuing wave of backlash induced Google to change its story: it is now extending the life of the service another six months (though not allowing further purchases) and offering full refunds in addition to the $10 credits.

Google evidently shut down Google Video because it pales in significance next to YouTube, which Google acquired some time after it set up Google Video.  Google Video appeared to be an experiment, a toe in the water of commercial content commerce.  It has had relatively few subscribers, is clearly not strategic to the company, and is in many ways antithetical to the YouTube model. 

Although Google Video runs on PCs, Google does everything it can to be a "pure" Internet business and minimize its reliance on PCs or other particular devices.  As a consequence of this, its DRM mechanism does not rely on authentication information (such as licenses and identities) stored on users' PCs; it uses a server to authenticate files before playing them. That is why users could no longer access their videos after Google takes the server down.

Two arguments have been advanced in the wake of Google's actions.  One is the standard argument about DRM and copyright: that Google's DRM scheme effectively curtailed users' rights under copyright law by denying them the right to access content in perpetuity that they thought they were purchasing.  This would be true if users were actually purchasing copyrights.  The fact is that users of Google Video, or any similar scheme, are not purchasing copyrights. In DRM schemes for pure digital products (as opposed to physical digital products, such as DVDs), users obtain licenses to use content according to the terms of the license.  Many advocates view this as a content owner's smokescreen for denial of rights.  (For example, Fox Studios prefers the term "electronic licensing" to the more common "electronic sell through," for video downloads-to-own, the latter connoting purchase of a copyrighted work that would indeed be subject to copyright law.) 

Therefore, under current law, the consequences when a service provider like Google Video goes out of business are chiefly a matter of consumer expectations.  As we are seeing with digital music purchased online, consumer expectations derive from CDs, which are not copy-protected; therefore they expect the same of their downloads, and so the music industry is moving in that direction.  In this case -- and in general with permanent paid digital downloads -- consumer expectations derive from sale of copyright, which Google Video resembles but is not.  Consumer expectations are different when the business model is clearly different -- for example, with subscription or ad-driven services.

It is also possible that Google Video's Terms of Service enabled it to pull the plug without legal liability.  This is not peculiar to DRM: so-called clickwrap agreements that limit users' rights, and that no one actually reads, predate DRM by many years.

The other argument that has been promoted after the Google Video shutdown is a more original one: regardless of whether DRM is evil, this turn of events shows the need for consumers to be able to circumvent DRM in certain legitimate circumstances.  One commentator suggested that it provides a case on which to base a request for an exception to the US anticircumvention law (DMCA), to send to the Copyright Office when it conducts its next rulemaking in 2009.  Namely, that consumers should be allowed to legally hack a DRM when it depends on a service provider that ceases operating and provides no alternatives. 

This sounds like a good idea.  The standard argument from content owners against this would be the one that they use against most other DMCA exceptions: that the right to circumvent under those circumstances leaves users with capabilities to use content in ways that they may not have been granted in the first place (remember: this is licensing, not sale of copyright).  But a more interesting counter-argument can be made that applies to both sides of the issue: that this type of DMCA exception will make content owners more cautious about licensing their material, especially to startups, which could stifle business model innovation. 

One thing is clear: in its original choice to shut down its authentication server abruptly, Google committed a consumer-hostile act, to which it had more reasonable alternatives. The one it ultimately chose -- a grace period, full refunds, and "come back to us" credit -- was certainly more reasonable.  Another alternative would have been to strike a deal with another service provider -- Amazon or Movielink (now Blockbuster), say, to transfer user registration and offer users credits equivalent to their purchases.  This is what happened when AOL Music Now and Virgin Music Club ceased operations several months ago: they arranged to offer their users subscriptions to Napster.  It is also happening now as MTV's URGE music service transfers its user base to RealNetworks' Rhapsody as it strikes up a partnership with the service.  In any case, one wonders how much outcry about the evilness of DRM there would have been if Google had chosen the more consumer-friendly path in the first place.

Before Google's change of heart, there was some hallway speculation at this week's Progress and Freedom Foundation Aspen Summit, a conclave of technology policy wonks, that Google did what it did deliberately in order to give DRM a black eye -- as a jab at competitors that support DRM, notably Microsoft.  Now we know that this probably not what Google had in mind.  It has less to do with the evilness or goodness of DRM -- or any other piece of technology -- than with learning experiences in the crucible of consumer expectations and the market.

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