What will Universal do about YouTube now Warners have joined up?

October 2006

Internet, broadcasting, record labels

The strange honeymoon between record labels and websites such as YouTube seems to be in the balance. Universal Music Group Chief Executive Doug Morris hit out at YouTube and other social networking sites claiming they owed record labels “millions”. Speaking at the annual Merrill Lynch Media & Entertainment Conference, Morris said: “We believe these new businesses are copyright infringers and owe us tens of millions of dollars. How we deal with these companies will be revealed shortly.” The comments were surely aimed primarily at YouTube where large volumes of artist videos and concert footage have been illegally uploaded. Five Eight magazine says that According to ‘insiders’ on both sides, the major labels are in talks with YouTube about how to remove unlicensed content and also implement a workable business model for licensed content and in stark contrast to what seems to be Universal’s position (though it may be a negotiation tactic of course) Warner Music has become the first major label to formally license its content to YouTube. Last month, YouTube announced an advertising deal with Warner Music as the start-up’s first partner for its new Brand Channel advertising to promote the new Paris Hilton album, this new deal will see video content from Warner artists available on the service and will allow  users to incorporate music from Warner’s catalog into the videos they create and upload. Both parties will share revenue created by advertising, which will be featured around the videos. YouTube said it would use a new advanced content identification and royalty reporting system, set for release by the end of the year, to identify the music videos and help manage payment to the record labels. In reality and whilst a valuable promotional platform, Universal and the other major labels must be looking to avoid the ‘mistake’ they made when MTV was set up – music labels helped build the television channel by providing videos free of charge to promote their artists. Labels saw little of the hundreds of millions of dollars MTV later earned – but maybe the Warner deal is the start of a new business model which might just work in the digital age and

Warner chief Edgar Bronfman Jnr said “Consumer-empowering destinations like YouTube have created a two-way dialogue that will transform entertainment and media forever.”


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