Labels Profited Directly from YouTube Buy

11 Comments

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.

11 Comments

pwb

“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.

Chris D

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.

?

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

Sramana Mitra

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?

neurokinetikz

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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