Warner Music Embraces YouTube

Warner Music figured out how to protect its copyright and get royalties from YouTube, the extremely popular internet video site. Rather than threaten with lawsuits, Warner signed a deal with YouTube that lets anyone use Warner artists in their home-brewed videos, and YouTube will pay Warner based on software monitoring of the various bits used. This came days after Universal Music called YouTube “copyright infringers” and owes the music biz “tens of millions of dollars.” Guess which method will work best?

The internet has destroyed the foundations of the record business, and there’s no putting it back the way it was. What must happen is the creation of new, market-based revenue streams that rely on, rather than resist, the new technology. People are going to use the technology in ways no one planned on, but there is a way to derive revenues from that use; just ask Google.

Of course, the fact that YouTube has 100 million videos viewed each and every day is significant. Warner will get a tiny slice of a huge pie, but the company is betting on two things: first, cooperating is cheaper than going to war (and in business, it always is), and second, exposure will result in even greater sales than before (and free radio didn’t kill the music business at all).

Where this gets interesting is in the use of Warner music in home-brewed videos. These things are made by amateurs who put them together on their PC and upload them to YouTube. While most are dross, every once in a while, one will suddenly become the hottest thing on the web for about a week. Warner has just positioned itself as the source for material, whether soundtrack, video clip or whatever. Where before the deal, Warner got nothing and couldn’t really defend its copyright, it now has a new free source of revenue.

Garage bands are a staple of rock and roll, and sampling is at the heart of loads of hip-hop. The internet offers new artists or just kids with some spare bytes on their hands a chance to reach an audience of hundreds of millions. Warner figured out that it was more profitable to join them than beat them, and then had the corporate sense to do just that.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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