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ON: YouTube’s Revenue Share Deal

gravatar
 · 
September 20, 2006
 · 
2 min read

Winning over another would-be foe, YouTube has reached a
revenue-sharing deal with Warner Music Group, which will now distribute
and license its copyrighted content through the hugely popular
video-sharing site.

YouTube
will pay Warner Music royalties whenever one of its users uses the
company's music in a video. Searching for Madonna under YouTube's music
category yields 5,493 videos referencing the material girl.

Warner can now expect an undisclosed share of ad revenue whenever
YouTube users stream a video containing the company's intellectual
property. If, for example, an amateur auteur borrows a snippet of
Madonna's latest video, or scores their short with a track from Missy
Elliot's new album, Warner is now guaranteed compensation. To make this
possible, YouTube developed a royalty-tracking system that detects when
homemade videos are using copyrighted material.

Universal's lawsuit threat
The announcement comes less than
week after Universal Music CEO Doug Morris threatened to sue YouTube
over its failure to prevent copyright violations -- still a common
reaction for record labels, movie studios and TV networks anxious to
protect old business models.

More and more media companies, though, are reconsidering their
positions on YouTube and its millions of daily users. Before Warner's
about-face, the best example of this trend was NBC's decision in June
to promote its fall lineup on it own YouTube channel.

"Consumer-empowering destinations like YouTube have created a two-way
dialogue that will transform entertainment and media forever," Warner
Music Group CEO Edgar Bronfman Jr. said in a prepared statement. "As
user-generated content becomes more prevalent, this kind of partnership
will allow music fans to celebrate the music of their favorite artists
to reach consumers in new ways, and ensure that copyright holders and
artists are fairly compensated."

Third-largest recording company
Warner Music ranks as the
country's third-largest recording company with annual revenue of $3.5
billion. Besides it pseudonymous label, Warner Music Group includes
Atlantic, Asylum, Elektra and Rhino. Warner is also using YouTube to
distribute music videos.

Warner is not to first record label to experiment with YouTube; Capitol
Records recently posted videos by The Vines, Cherish and OK Go on the
site.

In August, YouTube drew 34 million unique visitors, up dramatically
from 3.5 million at the start of the year, according to ComScore Media
Metrix.

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