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YouTube’s Plan To Gain The Upper Hand With Music Labels

Record labels like Universal Music Group are using YouTube to rake in millions of dollars from their music videos, and yesterday we raised the question of whether Google was making much money from these deals. Well, sources tell MediaMemo’s Peter Kafka that the answer is a big, fat no. In fact, the music clips are costing Google (NSDQ: GOOG) money, even though YouTube is running ads on them.

But that is about to change, Kafka says. Currently, YouTube pays the labels either a per-stream fee or a portion of the ad revenue (if there’s an ad on the video) every time a user clicks on one of their music clips; but since YouTube hasn’t saturated the site with ads (yet), most of the time it’s stuck with the per-stream fee. YouTube is in the midst of negotiating new deals with the labels (UMG, EMI, Sony (NYSE: SNE) and Warner Music Group) on very different terms, and Kafka’s sources say the new terms will not add nearly as much cash to the labels’ coffers. The current deals expire over the course of 2009.

2 Responses to “YouTube’s Plan To Gain The Upper Hand With Music Labels”

  1. Youtube Google

    Definately, Youtube and Google are the Winner! Look the stock market value of WMG fall after the the deal fail. The Musician and the Artist are now suffering because of the fans dismay.


    Google should ban all search request for WMG related searches. Any artists or songs…I'm on youtubes side and I"m sure as hell never buying a CD from any artist on WMG until they stop taking down videos