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Summary:

YouTube’s deal with Warner is definitely a great first step. Licenses to music videos, and especially allowances for member videos that use Warner music, make YouTube more than just the biggest video site (read: hot air balloon) on the web. Just a month ago we wrote […]

YouTube’s deal with Warner is definitely a great first step. Licenses to music videos, and especially allowances for member videos that use Warner music, make YouTube more than just the biggest video site (read: hot air balloon) on the web. Just a month ago we wrote “What would be really cool is if these YouTube-music label talks end up with some kind of allowance for music video mashups and the like.”

So far, the public details of the Warner-YouTube arrangement – how much songs can be altered, how much ad revenue will be shared – are slim to none. But Rafat Ali from paidContent picked up on an interesting detail in a Forbes story on the topic:

“[M]usic industry executives say that YouTube has offered other labels an option for an equity stake in the company as part of proposed deals.”

Forbes writer Peter Kafka notes that if Warner has taken a chunk of YouTube, other labels face an expensive precedent in their potential dealings with the startup. Universal, of course, will drive a hard bargain, with its publicly voiced attitude that YouTube and MySpace “owe us tens of millions of dollars.”

We had gotten worried YouTube was sitting tight in the precarious position of waiting for an acquirer to pay up for its traffic. But lacing in copyright identification and management software, and (possibly) ownership by its biggest would-be enemies, makes it a much stronger prospect.

At the same time, playing nice with music labels doesn’t change YouTube’s financial reality. Their revenue estimates are just that: estimates; and the company, after paying off its label partners, would be left with an even smaller share of whatever it will eventually earn.

  1. YouTube Partners with Warner Music Group…

    YouTube and Warner Music Group (WMG) announced today announced a partnership in distributing music videos of artists under WMG. Also, WMG will have the opportunity to authorize the use of its content by the YouTube community by taking advantage…

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  2. Clucking loudly while negotiating…

    I suspect there is a playbook that media industry types collectively use when negotiating deals with technology/web startups. The latest situation involving YouTube and Universal Music comes right out of this playbook. The entire play goes something …

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  3. Andrew Phillips Tuesday, September 19, 2006

    I’m a big fan of web-videos YouTube is practically my homepage. But anyone who has ever tried to use its search feature knows that the only videos you can find are the ones
    that people have submitted. When Google introduced their Video Search I was encouraged, thinking, maybe I’ll finally be able to find those rare gems (outtakes from the Tovak episode of Star Trek, etc.). But that Google feature only searches the videos available on Google’s own server, not the on web. Tovak hasn’t got a home on my PC yet…

    But I recently found out about a new video search engine, ClipBlast, which unlike Google, YouTube, etc. searches ALL the videos on the net. (But, like them, is totally free.) Every single one available to you easily. http://www.clipblast.com is the site for any video search find Tovak a home or download the latest “Better Know a District” from The Colbert Report (“silent T” of course). And unlike YouTube or Google, ClipBlast also has important news and information videos, from CNN to the BBC and rare interview clips, etc.

    You can find even high quality video, something difficult on YouTube, almost impossible on Google. So, find Tovak a home and give clipblast a try. You won’t be disappointed.

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  4. While it may be remotely conceivable that Warner took an equity stake, it would cause YouTube to loose neutrality with respect to the Content Owners. So that makes it hard for me to believe.

    If this does turn out to be true, then expect to see other Content Owners come out even a bit tougher against YouTube. Ever since Sony Pictures purchased Grouper (Sony = BMG Music), there may be some “alignments” happening in the industry. This partnership is a relatively lost cost way for Warner to experiment in the media and “test the waters”.

    I wouldn’t – however – be suprised to see the recent Level3 announcement having an equity component (e.g. warrants) for highly discounted bandwidth costs in the near term.

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  5. [...] of all this complaining is high grade manure. All record labels got a piece of YouTube right before the company was sold to Google in October 2006 — a stake that translated to about $50 million [...]

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