YouTube is driving more than traffic to music labels like Universal Music Group. Rio Caraeff, EVP of UMG’s eLabs, told CNET that YouTube is adding “tens of millions of dollars” to the recording company’s bottom line: “(YouTube) is not like radio, where it’s just promotional … It’s a revenue stream, a commercial business.”
The video site shares revenue with record companies like UMG from ads appearing with their music videos, as well as user-generated clips featuring their artists’ tracks. UMG’s eLabs division has brokered such deals with YouTube and others, including MySpace Music, over the past three years, and has made about $100 million dollars off its music videos as a result. By Caraeff’s account, YouTube has been responsible for a large chunk of that (which should make UMG doubly happy, since it, like some other labels, took a small stake in YouTube as part of the content-sharing deal). And while that’s great for the labels, what about Google?
The company doesn’t break out YouTube revenue, but the consensus among analysts and shareholders is that the site will still only contribute about one percent worth of Google’s estimated $20 billion worth of revenue this year. But Caraeff says this may one of the first signs that YouTube’s plethora of monetization strategies — from keyword, post-roll and local video ads, to content deals, live shows and even an orchestra competition — are starting to gel. “They have finally turned their spotlight on ‘How do we turn this into a business?'” That they are having a hard time at it, is well, reality that they are finally at least facing head on…
Image: Universal Music Group artists The Killers.