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Summary:

Turns out the quick succession of YouTube deals last Monday — first with music labels Universal and Sony BMG, then with Google — was not a coincidence. The New York Times reports that YouTube gave each label an equity stake that just hours later was valued […]

Turns out the quick succession of YouTube deals last Monday — first with music labels Universal and Sony BMG, then with Google — was not a coincidence. The New York Times reports that YouTube gave each label an equity stake that just hours later was valued at up to $50 million from the Google acquisition. That maneuvering does seem a little shady, but all three of the involved parties — YouTube, Google, and the labels — benefited, so none of them are going to complain. If those payouts are enough to keep the labels off the lawsuit-trigger, that would be a pretty slick move. Too bad there weren’t similar deals worked out alongside TV and movie licensing.

We had previously reported that this kind of equity setup may have been rigged up for the Warner music content licensing deal signed back in September. Apparently that was indeed the case, and EMI is the only major label without a YouTube (now Google) stake.

  1. Wow. Now things are beginning to make sense with the lawsuit against Bolt and Grouper. Equity from those companies, I presume, would be far less desirable than Google/YouTube. Thus the lawsuits to scare them into either giving away a larger chunk of their equity or a generous cash payout/revenue share.

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  2. How do I add spacing to images in my RSS feed?…

    I’m pulling out my hair! I want to include images in my blog entries and have those images show up in the RSS feed too, but either I end up with no image showing up at all, or I end up with the text abutting the image, which looks terrible. What’s th…

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  3. I wonder if SEC’s witch hunt is going to start addressing deals like these as well, at a later date!

    The Options back-dating was common practice at one time for which lots of top executives are now getting dinged. Frank Quattrone had been a practitioner of a common “reserve shares” sharing practice. All those mechanisms have now become illegal.

    Will such conflict-of-interest deals also become illegal?

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  4. The Real YouTube Deal…

    The news is now out… Just before the GooTube deal went down, YouTube carved off equity chunks for a number of the major music labels to make their problems go away… and the value of each of the chunks: $50million. Nice work for the labels. They l…

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  5. WOW! C-SPAN(Tube) channel is getting interesting! Last month, HP, and now coming soon Google-YouTube!

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  6. Bubble Economics…those backroom deals are back…

    So thats how they did the deals so quickly…there I was thinking the YouTube dealmeisters were dealmaking superheroes when it was good old…ummmm – “unique consideration” – all along. Patrick’s Razor – that the most cynical explanation is the…

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  7. Who cares about the record labels doing a “backroom deal” with YouTube. The people that are going to nail YouTube are the TV and Movie industries. With this latest Japanesse TV broadcaster request to remove 30k of videos, maybe the beginning rounds are being shot off. The big thing is their request that YouTube implement pre-screening, which would be an operationally speaking near-impossibility for them.

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  8. “The big thing is their request that YouTube implement pre-screening, which would be an operationally speaking near-impossibility for them.”

    Actually, with Mechnical Turk or an equivalent, it would be pretty easy and not too expensive.

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  9. [...] GigaOM ” Labels Profited Directly from YouTube Buy … New York Times reports that YouTube gave each label an equity stake … A fine parody of YouTube video removal policy. Eric Schmidt admits we’re arrogant’ … [...]

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  10. [...] label to partner with YouTube to share audio and video recordings. Warner, Universal, and Sony BMG had taken equity stakes in YouTube last fall just prior to it being bought by Google, alongside similar partnerships with [...]

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