OMEN
09-19-2006, 08:21 AM
YouTube Inc., the online video-sharing site, said yesterday that it had agreed to share advertising revenue with Warner Music Group in a deal that authorizes YouTube to show Warner Music videos and user-created clips that incorporate Warner music.
The deal reflects an effort by YouTube to continue running a service whose popularity is based largely on free viewing of consumer-generated video clips, many of which include copyrighted material like music, television broadcasts and films.
Under the revenue-sharing accord, YouTube.com will use special software to identify recordings used in videos posted by users and then offer the owner of the copyrighted music a percentage of the fee for advertising that would run alongside the clip. The deal also provides for the copyright owner to demand that YouTube remove the clip instead. Terms of the deal were not disclosed.
The deal marks the first time a major record company has licensed content to YouTube, whose emergence has created a philosophical divide among intellectual property owners.
Last week, the chief executive of Universal Music Group, the world’s biggest music corporation and a subsidiary of Vivendi, said at an investor conference that social networking and sharing sites — like MySpace and YouTube — infringe on the label’s copyrights and “owe us tens of millions of dollars.”
Alex Zubillaga, Warner’s executive vice president for digital strategy, declined to say whether the new accord provided Warner with any compensation for past use of the company’s videos and songs by YouTube users.
But he said that “our general philosophy is, we want to lead through innovation as opposed to litigation. The user-generated content phenomenon is something we believe is only going to continue to grow and is probably unstoppable. We’d like to be a part of it and make it a great experience for consumers and make sure we and our artists are being rewarded.”
YouTube, based in San Mateo, Calif., says its clips are viewed more than 100 million times a day. Warner’s labels, which include Warner Brothers Records and Atlantic Records, have been particularly eager to market to that audience.
Warner Brothers Records, for example, recently created a “channel” on YouTube to promote its Paris Hilton album, and shared revenue with YouTube from the channel’s sponsor, Fox Broadcasting’s “Prison Break” show. Mr. Zubillaga said his company was particularly interested in recruiting sponsors for similar marketing efforts.
It remains unclear whether YouTube will be able to overcome other copyright holders’ doubts or generate significant ad sales while it remains a potential object of litigation.
Also, as the arrangement with YouTube is structured, Warner Music will be responsible for striking separate deals with individual music publishers to obtain licenses for the musical compositions and lyrics in the recordings. “Both tactically and legally, it’s a minefield,” said Gerd Leonhard, chief executive of Sonific, a digital licensing company.
But Mr. Leonhard said the major record companies — who have been suffering from flagging sales industrywide for most of the decade — would still probably provide licenses to YouTube to capitalize on its vast audience.
“The record companies are realizing their game is completely lost in terms of controlling the market,” Mr. Leonhard said. “Digital sales aren’t picking up as they should. If they don’t play ball now, they’re going to sit by themselves while everyone else is using their content for nothing.”
New York Times
The deal reflects an effort by YouTube to continue running a service whose popularity is based largely on free viewing of consumer-generated video clips, many of which include copyrighted material like music, television broadcasts and films.
Under the revenue-sharing accord, YouTube.com will use special software to identify recordings used in videos posted by users and then offer the owner of the copyrighted music a percentage of the fee for advertising that would run alongside the clip. The deal also provides for the copyright owner to demand that YouTube remove the clip instead. Terms of the deal were not disclosed.
The deal marks the first time a major record company has licensed content to YouTube, whose emergence has created a philosophical divide among intellectual property owners.
Last week, the chief executive of Universal Music Group, the world’s biggest music corporation and a subsidiary of Vivendi, said at an investor conference that social networking and sharing sites — like MySpace and YouTube — infringe on the label’s copyrights and “owe us tens of millions of dollars.”
Alex Zubillaga, Warner’s executive vice president for digital strategy, declined to say whether the new accord provided Warner with any compensation for past use of the company’s videos and songs by YouTube users.
But he said that “our general philosophy is, we want to lead through innovation as opposed to litigation. The user-generated content phenomenon is something we believe is only going to continue to grow and is probably unstoppable. We’d like to be a part of it and make it a great experience for consumers and make sure we and our artists are being rewarded.”
YouTube, based in San Mateo, Calif., says its clips are viewed more than 100 million times a day. Warner’s labels, which include Warner Brothers Records and Atlantic Records, have been particularly eager to market to that audience.
Warner Brothers Records, for example, recently created a “channel” on YouTube to promote its Paris Hilton album, and shared revenue with YouTube from the channel’s sponsor, Fox Broadcasting’s “Prison Break” show. Mr. Zubillaga said his company was particularly interested in recruiting sponsors for similar marketing efforts.
It remains unclear whether YouTube will be able to overcome other copyright holders’ doubts or generate significant ad sales while it remains a potential object of litigation.
Also, as the arrangement with YouTube is structured, Warner Music will be responsible for striking separate deals with individual music publishers to obtain licenses for the musical compositions and lyrics in the recordings. “Both tactically and legally, it’s a minefield,” said Gerd Leonhard, chief executive of Sonific, a digital licensing company.
But Mr. Leonhard said the major record companies — who have been suffering from flagging sales industrywide for most of the decade — would still probably provide licenses to YouTube to capitalize on its vast audience.
“The record companies are realizing their game is completely lost in terms of controlling the market,” Mr. Leonhard said. “Digital sales aren’t picking up as they should. If they don’t play ball now, they’re going to sit by themselves while everyone else is using their content for nothing.”
New York Times