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Video Website Veoh Co-Founder Confirms Bankruptcy, Legal Battles Did Them In

from www.pcmag.com – The co-founder of video Web site Veoh confirmed Wednesday night that the recession and legal troubles have prompted the site to file for bankruptcy.

“Unfortunately, great vision, a passionate team, tens of millions of users, millions in revenues and victory in court were not enough,” co-founder Dmitry Shapiro wrote in a note on his Web site.

“The distraction of the legal battles and the challenges of the broader macro-economic climate have led to our Chapter 7 bankruptcy.”

Veoh, a site that includes professional and user-generated content, debuted in 2005 “with a bold goal: To make it possible for anyone with a video camera and a computer to broadcast video to the world,” Shapiro wrote.

Two years in, however, the site found itself locked in a legal battle with Universal Music Group. Veoh preemptively sued UMG in August 2007 after the company threatened to take legal action over Veoh’s use of Universal content. Universal responded several weeks later with its own copyright infringement suit.

In September 2009, Veoh was handed a victory when a California judge threw out UMG’s copyright infringement case against the video site. Veoh made every effort to remove infringing material from its site, as is required by the Digital Millennium Copyright Act (DMCA), and was protected by the law’s safe harbor clause, according to the court.

“While we made every effort to convince them that we were not their enemy and had not infringed on their content, they pursued a relentless war of attrition against us in federal court,” Shapiro wrote Wednesday.

A year earlier, Veoh also won a copyright infringement case filed by adult entertainment company IO Group, which sued Veoh in 2006 after it discovered clips from 10 of its films on Veoh.com. Rather than file DMCA takedown notices, IO immediately filed suit against the video company. Veoh banned adult content from its site during the trial.

Despite the fact that it prevailed in several legal battles, the cost of fighting took its toll on the site. Veoh announced in April 2009 that it would lay off 25 staffers and refocus on its video compass browser plug-in – despite the $70 million in capital that the company raised from investors such as Intel, Time Warner, and Goldman Sachs.

“We grew our passionate audience base to over 28 million users per month, built a business with a run rate of $12 million, and helped educate many blue chip advertisers about the bright future that online video holds for them,” Shapiro said.

“This is a critically important time in the evolution of the Internet as an open communications medium, and all of us at Veoh wish those companies that continue to innovate in the space, great success,” he concluded. “This chapter of our lives has come to an end, but a bright new chapter will soon begin, and I assure all of you reading this that we have lots of important work ahead of us. Stay tuned, you will hear from us again!”

Veoh.com is currently still live. Shapiro did not provide any details on when it might go dark, or what will happen to existing content.

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