Warner Music embraces YouTube

False dawn, or new era for bandwidth benefactor?

By Drew Cullen, 18th September 2006

Warner Music Group (WMG) has broken ranks with its fellow music majors and is climbing into bed with YouTube. The record label will use the video hosting phenomenon to distribute music videos and extras such as interviews with bands, and documentaries. Also, YouTube users can tap WMG’s music catalogue for backing on videos they make and upload onto the service.

This does not signify that WMG is giving its blessing to freeloaders: it will use YouTube's "advanced content identification and royalty reporting system, set for release by the end of the year". The two companies will also share advertising revenues on WMG videos uploaded onto YouTube.

According to WMG, the YouTube deal will enable artists to connect with a vast audience in an "entirely new way". Warner Music boss Edgar Bronfman says: "As user-generated content becomes more prevalent, this kind of partnership will allow music fans to celebrate the music of their favorite artists, enable artists to reach consumers in new ways, and ensure that copyright holders and artists are fairly compensated."

Chad Hurley, YouTube's CEO, says the deal is a significant milestone for the company. "By providing a new distribution opportunity, we are paving the way for media companies to harness the vast financial potential of user-generated content on YouTube. We are thrilled that WMG had the vision to be the first music company, in partnership with its artists, to support the use of their content within user videos and to allow our community to interact with WMG music in new creative ways."

Chad is laying it on with a trowel, but one can understand his relief in finding a big backer, which could turn the bandwidth benefactor into a revenue generator. Maybe. And also his relief in finding a big backer who might encourage others to lay off the lawsuits.

That's a very big maybe. Universal Music, the world's biggest music major, for one is unimpressed. Last week, UMG boss Doug Morris fired across the bows of YouTube, and others. "We believe these new businesses are copyright infringers and owe us tens of millions of dollars," he told a conference, "How we deal with these companies will be revealed shortly."

The world+dog has interpreted this as a threat to sue YouTube. Indeed, it is a miracle that the company has escaped so long from reprisals. Forget all the hype about the user-generated content, it is the user-stolen content that concerns copyright owners.

In a pugnacious piece on his blog, Mark Cuban, forecasts the coming dramatic decline of YouTube. Cuban, a billionaire who knows a thing or two about bubble companies, likens YouTube to pre-legal Napster. The comparison is instructive. ®