Web sites that allow users to swap and share materials, i.e. videos, music, photos, are hot M&A properties for top-line Internet and media players. Why not? They have a history of gaining rapid popularity among hip surfers, create channels for easy-to-spot advertising, and offer a potential for quick payback of sometimes outsized purchase prices. Getting in early is a priority among the highly competitive companies jockeying for critical mass and market position. But there’s a downside to the acquisition frenzy in cyberspace. As dealmaking grows, so does the prospect for litigation, mostly focused on copyright infringement allegation, in an unsettled area of the law. A loss can be expensive, distracting, and time consuming.
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