Music Labels To Take Stake in YouTube? UMG, SonyBMG, EMI Also Talking

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That’s a speculative headline on my part, but some ponder-worthy details in this story from Forbes.com. We mentioned about the WMG-YouTube tie-up last night, but this has some more details. On the filtering technology YouTube has to implement by the end of this year: it is similar to technology already offered by both Audible Magic and Snocap, which only work on audio. YT’s technology will be designed to work on video as well, though it will only start with audio.
The two have said it will be a ad rev-share deal, but the story says, citing sources that YouTube has offered other labels an option for an equity stake in the company as part of proposed deals. “If Warner took YouTube up on such an offer, it could create an expensive precedent for every other copyright holder YouTube wants to settle with,” the story says.
The deal is complicated as this story says; it only works for both Warner and YouTube if the myriad other companies with legal claims on the work YouTube shows decide to play along. But “if it can’t get other rights holders to play along, it doesn’t mean the company is doomed. It just means that it’s wild and woolly inventory will shrink down to a sedate, corporate-sanctioned list of offerings.”
AFX: Universal Music Group is also negotiating with YouTube to strike a distribution deal, the world’s biggest label confirmed today, as is Sony BMG Music Entertainment.
WSJ: Alex Zubillaga, Warner’s executive VP for digital strategy and business development, said the terms are “comparable” to those of its other video-licensing deals. Existing video-licensing deals currently don’t generate significant revenue for music companies. People who work in the industry estimate Universal Music Group earns around $15 million a year, or less than 0.5% of its annual revenue, from hundreds of online video licensees. But the money these deals generate is growing rapidly, these people add.

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