Online “video snacking” syndication company, Grab Networks, is suffering a case of indigestion over a $3 million bill from the Associated Press that’s been left unpaid for nearly two years, according to a federal lawsuit.
The wire service claims that Grab, a Virginia-based company, refuses to pay for Web video that they've posted over the last five years.
Under a contract with AP subsidiary, the Press Association, Grab was supposed to pay a thousand dollars a month to host clips like “A Day in History” and NBA basketball highlights, among others.
The contract was originally signed by Voxant, a news video website that was absorbed by Grab Networks in a 2008 merger. The contract was extended another year under the new company.
When Voxant first launched in 2006, they leaned heavily on the wire, racking up $1,790,00 from Oct. 2006 to Nov. 2008 to use their Web clips. Their dependence tapered off over the next few years as the rate went up from $1,000 per month to a staggering $13,000 per month, according to the suit.
Grab Networks says that they have yet to see the lawsuit but denied reneging on their agreement.
“We were surprised to learn of the Press Association’s legal action against us as we have always upheld our business and legal obligations with our partners and will continue to do so,” a company spokeswoman tells Adweek.
Grab, which was formed in 2008 in a merger between Voxant and Anystream, is a software company that automates video encoding and touts itself as a liaison among content providers, advertisers, and websites to distribute short clips to the Web—“video snacks.”
The merger garnered $12 million in funding from several tech investment firms to cover past debt and future operating costs.
The new company promises to take video snippets provided by Splash News, Fox Sports, and other outlets and offer it to interested websites. The company says that through its Web partners it can provide a broader distribution—12 million to 14 million unique users—and more revenue for content providers.