The Google Scandal: Keeping $809K of $1.1M of Revenue Generated from Piracy (Allegedly)

So our friends at the Wall Street Journal (subscription required) are running multiple stories on Google today with reference to online video. At the heart of the story is the classic clash between Google’s mantra “Do No Evil” and, well, the evil Google is apparently doing.

Perhaps as a result of this alleged evil, talks are back on among media companies to create a YouTube rival, according to unnamed executives involved in the situation. Another form of pseudo-pressure is coming from MySpace, which is likely to announce today a video-filtering system so as to be on the good side of those copyright protectors.

But back to the Google scandal…

So the claim (which is fairly substantiated at this point) is that Google deliberately directed traffic to sites promoting/fostering piracy. So now media execs are questioning the inner workings of Google (who isn’t?). Google responded to the studios on Friday with a basic “it won’t happen again” line, explaining that it would implement new procedures.

Though Google ads are usually sold through its automated system, the traffic to the sites in question generated enough revenue for a Google account representative to take notice. It doesn’t help that the owners of these sites (EasyDownloadCenter.com and TheDownloadPlace.com) said in sworn statements that Google reps offered them credit for advertising via Google.

They also said Google set them up them with keywords like “bootleg movie download,” “pirated,” and “download harry potter movie,” which gave them a nice traffic boost. And apparently Google offered the site owners credit so they didn’t need credit cards to pay the usual fees, though it’s still being determined if this offer was accepted. And remember that much of this is “according to people familiar with the matter,” etc.

A Google employee involved confirmed some of this, but now most the details have been sealed by the court. Though the numbers leaking now show that out of the $1.1 million in revenue the two sites generated from 2003-2005, $809,000 went straight to Google.

Yikes! I wonder what kind of incentives are/were in place for a Google account rep to make this kind of move. I’m not necessarily ready to point my finger and call Google evil, but this sure isn’t helping the image of the company.

Incidentally, if the dollar figure amounts cited above are correct, Google may be hearing from a bunch of unhappy publishers (nearly 80% went to Google? I wonder if that’s indicative of regular accounts).