The digital copyright issue is one of the sidebars related to the Google/YouTube transaction that has merited a fair amount of digital ink.

(For a few examples: don’t miss Fred von Lohmann as interviewed by John Battelle. Declan McCullagh and Anne Broache have an extensive piece highlighting the continuing uncertainty in the digital copyright space and quoting experts like Jessica Litman. Steve Ballmer brings it up in his BusinessWeek interview on the deal, asking, “And what about the rights holders?” And the enormously clever Daniel Hausermann has an amusing take on his new blog.)

My view (in large measure reflected in the WSJ here, in a discussion with Prof. Stan Liebowitz) is that Google is taking on some, but not all that much, copyright risk in its acquisition of YouTube. Google has already proven its mettle in terms of offering services that bring with them a reasonably high appetite for copyright risk: witness the lawsuits filed by the likes of the publishing industry at large; the pornographer Perfect 10; and Agence France Presse. There’s no doubt that Google will have to respond to challenges on both secondary copyright liability and direct copyright liability as a result of this acquisition. If they are diligent and follow the advice of their (truly) brilliant legal team, I think Google should be able to withstand these challenges as a matter of law.

The issue that pops back out the other side of this flurry of interest in the broader question of the continued uncertainty with respect to digital copyright. Despite what I happen to consider a reasonably good case in Google’s favor on these particular facts (so far as I know them), there is an extraordinary amount of uncertainty as a general matter on digital copyright issues in general. Mark Cuban’s couple of posts on this topic are particularly worth reading; there are dozens of others.

Many business models in the Web 2.0 industry in particular hinge on the outcome of this uncertainty. A VC has long written about “the rights issues” at the core of many businesses that are built, or will be built, on what may be the sand — or what may turn out to be a sound foundation — of “micro-chunked” content. Lawrence Lessig has written the most definitive work on this topic, especially in the form of his book, Free Culture. The RSS-and-copyright debate is one additional angle on this topic. Creative Commons licenses can help to clarify the rights associated with micro-chunked works embedded in, or syndicated via, RSS feeds.

Part of the answer could come from the courts and the legislatures of the world. But I’m not holding my breath. A large number of lawsuits in the music and movies context has left us clearer in terms of our understanding of the rules around file-sharing, but not enough clarity such that the next generation of issues (including those to which YouTube and other web 2.0 applications give rise) is well-sorted.

Another part of the answer to this digital copyright issue might be provided by the market. One might imagine a process by which citizens who create user-generated content (think of a single YouTube video file or a syndicated vlog series, a podcast audio file or series of podcasts, a single online essay or a syndicated blog, a photo covering the perfectly captures a breaking news story or a series of evocative images, and so forth) might consistently adopt a default license (one of the CC licenses, or an “interoperable” license that enables another form of commercial distribution; I am persuaded that as much interoperability of licenses as possible is essential here) for all content that they create, with the ability also to adopt a separate license for an individual work that they may create in the future.

In addition to choosing this license (or these licenses) for their work, these users registered this work or these works, with licenses attached, in a central repository. Those who wished to reproduce these works would be on notice to check this repository, ideally through a very simple interface (possibly “machine-readable” as well as “human-readable” and “lawyer-readable,” to use the CC language), to determine the terms on which the creator is willing to enable the work to be reproduced (though not affecting in any way the fair use, implied license, or other grounds via which the works might otherwise be reproduced).

Some benefits of such a system:

– It would not affect the existing rights of copyright holders (or the public, for that matter, on the other side of the copyright bargain), but rather ride on top of that system (which might have the ancillary benefit of eventually permitting a global market to emerge, if licenses can be transposed effectively);

– It would allow those who wish to clarify the terms on which they are willing to have their works reproduced to do so in a default manner (i.e., “unless I say otherwise, it’s BY-SA”) but also to carve out some specific works for separate treatment (i.e., “… but for this picture, I am retaining all rights”);

– It might provide a mechanism, supplemental to CC licenses, for handshakes to take place online without lawyers involved;

– It might be coupled with a marketplace for automated licensing — and possibly clearance services — from creators to those who wish to reproduce the works;

– It could be adopted on top of (and in a complementary manner with respect to) other systems, not just the copyright system at large as well as worthy services/aggregators of web 2.0 content, ranging from YouTube, software providers like SixApart, FeedBurner, Federated Media, Brad Feld’s posse of VCs, and so forth; and,

– It would represent a community-oriented creation of a market, which ultimately could support the development of a global market for both sharing and selling of user-generated content.

This system would not have much bearing on the Google/YouTube situation, but it might serve a key role in the development of web 2.0, or of user-generated content in general, and to help avoid a copyright trainwreck.