On Monday, online video giant YouTube announced that it had inked a deal with Warner Music Group on Sunday afternoon that would allow both parties to share the advertising revenue derived from Warner’s videos. The deal includes promotional videos and audio for artist interviews and behind-the-scene clips in addition to WMG’s entire music video library.
The agreement finds its foundation in a new technology that will allow for the tracking and filtering of video content on YouTube. This will allow YouTube to determine how to share advertising revenue with labels and artists, and will also enable the site to monitor and remove any offensive user-generated videos that incorporate a label’s video or audio content.
This monitoring and reporting system is expected to be unveiled later this year.
WMG began partnering with YouTube last month when it launched a “brand channel” aimed to promote Paris Hilton’s debut album. This was the first deal of its kind for YouTube.
There are two key implications that come along with this acquiescence between representatives of two realms that seemed to be heading towards legal war in recent months.
One is that this move signals the fact that user-generated content sites wield power and allure that even music labels can no longer deny or resist. Despite recent threats of legal action by the Recording Industry Association of America (RIAA) against sites such as YouTube, MySpace, and Google Video, big labels including EMI and SonyBMG have been seeking more amicable and financially beneficial resolutions to the copyright issues.
“Consumer-empowering destinations like YouTube have created a two-way dialogue that will transform entertainment and media forever,” was the way Warner chief executive Edgar Bronfman, Jr. put it. “As user-generated content becomes more prevalent, this kind of partnership will allow music fans to celebrate the music of their favorite artists to reach consumers in new ways, and ensure that copyright holders and artists are fairly compensated.”
WMG’s deal with YouTube further cements the trend of labels shaking hands with online outlets rather than shaking fists at them. EMI and Universal Music Group have agreed to make their music available on SpiralFrog, which will make music available to its users for free, by way of online advertising support.
The second implication is that YouTube has found a viable way to generate stable revenue that is unrelated to venture capital funding and contextual ads. If all goes well for WMG, it should be expected that other big labels will be lining up for similar deals with YouTube, as well as other user-generated content sites.
“By providing a new distribution opportunity, we are paving the way for media companies to harness the vast financial potential of user-generated content on YouTube,” said YouTube chief executive and co-founder Chad Hurley.
It will be interesting to see whether or not YouTube will leverage its tracking system to share advertising revenues with its users. This model is already being used by Revver.com. Like MySpace’s recent deal with SnoCap, YouTube could utilize this as a way to reach small bands and musicians looking for a way to promote themselves and their music, while making some money.
The recently controversial Lonleygirl15 jumped from YouTube to Revver on Monday.
The deal is a relief for YouTube, and a potentially effective means for WMG to promote and distribute its artists and music videos. It is a smart move for both parties, and should set an example for similar resolutions between labels and viral sites in the near future.
However, not everyone is appeased.
For the past week, Universal Music Group’s CEO Doug Morris has been very vocal about his displeasure with YouTube, MySpace, and other viral sites. Morris has publicly announced his intentions to sue these sites for copyright infringement.
Though some contend that these sites cannot be held accountable for the copyright infringements, since the users are ultimately the ones who post the content in question, UMG could assert that in the end it is the sites that are responsible for monitoring and removing the content in violation.
Sources:
http://www.redherring.com/Article.aspx?a=
18615&hed=YouTube%2c+Warner+Make+Music
http://msnbc.msn.com/id/14885094/
http://www.dmnews.com/cms/dm-news/legal-
privacy/38275.html
http://www.adweek.com/aw/iq_interactive/
article_display.jsp?vnu_content_id=1003123542
http://publications.mediapost.com/index.
cfm?fuseaction=Articles.showArticle
HomePage&art_aid=48256
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