October 18, 2007 2:23 PM PDT

Posted by Elinor Mills

Three days after Google released its copyright-filtering technology for YouTube, the major studios have announced an alliance and guidelines of their own. It’s all well and good, but things will remain in limbo until Google settles its copyright lawsuit with Viacom.

Given that Google’s YouTube is the most popular viral video site on the Internet, the absence of Google from the alliance is significant. Until that lawsuit is resolved and Google and all media companies are aligned, the solution is theoretical.

“Keep your eye on the billion-dollar lawsuit at Viacom,” says Josh Bernoff, a Forrester Research analyst. “When that gets dropped, you’ll know we are over the hump.”

An industry effort that is lacking Google is about as powerful as the standards efforts in the ’90s that didn’t include Microsoft.

Neither Google nor Viacom, which is part of the media alliance, have much to say about the lawsuit filed in March. Bernoff expects Google will have to admit guilt and pay a penalty before the suit gets settled, but that would be a complete reversal from the company’s stance thus far.

Speaking at the Web 2.0 Summit Thursday in San Francisco, Viacom Chief Executive Philippe Dauman was mum about any lawsuit settlement prospects, but did say Google’s copyright-filtering technology “reflects a positive evolution and I welcome it.”

“Google is a very high-quality company with a lot of very smart people,” Dauman said. “They can do things when they want to. They haven’t wanted to until this point.”

Also on Thursday, Viacom announced that it would put the archive of its popular comedy newshour, The Daily Show with Jon Stewart, on the Internet.

Google was invited to join the alliance and talked with Disney about it, but ended up not signing on last week, sources say. Several people speculated that Google didn’t join the alliance specifically because it may have affected the outcome of the litigation.

A YouTube spokesman who asked not to be named said executives were worried that creating “industry-wide mandates” would stifle innovation.

“Google probably doesn’t disagree with the terms (of the guidelines) in principle, but doesn’t feel the need to sign onto something that would restrict their activity in the future,” says Bernoff.

“I think the net effect of this is a ball is now in Google’s court and they have to decide if they’re going to also adopt these guidelines,” said Ken Boehm, chairman of the National Legal and Policy Center, which keeps an eye on Internet piracy.

The alliance is significant. The entertainment industry has been selectively distributing content online, but has been waiting for solid antipiracy technology to arrive before moving aggressively. The hope is now that companies can rely on technology to filter out content that infringes on copyright, the long-heralded vision of on-demand entertainment will become a reality.

In addition to Viacom, the group includes: CBS, News Corp.’s Fox Entertainment Group and MySpace, NBC Universal, Disney, Microsoft and video-sharing sites Dailymotion and Veoh Networks.

For the alliance, coming up with the general principles won’t the hard part–getting everyone to agree to the specifics will be. For instance, the guidelines call for “promptly addressing claims that content was blocked in error.” That could be within minutes for the person who posted the content, but it could mean days for the site that blocked it.

“Getting the details right will involve a lot of wrangling,” Bernoff says. “This basically defines the rules of the road for anyone putting together a user-generated content site.”

The media companies have made a concession by including a principle to balance filtering copyrighted content with the interests of “fair use,” which allows exemptions for things like parodies, excerpts and educational uses.

The guidelines also call for the use of technology that blocks infringing uploads “before they are made available to the public.” This is the one area that seems to differ from Google’s filtering technology, which removes infringing content minutes after it is posted.

“That’s a huge problem,” says a source at one of the companies in the alliance. “Everyone who uses the Internet knows that once something is out there, it’s out there. You lose control.”

While it has taken years for the media companies to come to an agreement on copyright guidelines, the pace of digital innovation means that the threats to copyright might be different once the technology is actually in use.

“Technology moves faster than agreements,” said Bernoff. “A year from now there will be some new form of Internet content or sharing that falls within the cracks of this agreement.”

(CNET News.com’s Charles Cooper contributed to this report.)

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