Why Warner Need to Have Some Patience With YouTube

It’s not been the best of years for YouTube, what with all the copyright suits from the likes of Viacom that could cost the company billions. And the momentum of the online video world shifting to the new services like iPlayer and Hulu from ‘old-world’ TV broadcasters. Not to mention the largely unsuccessful efforts to transform YouTube’s video ad business. One could be forgiven for seeing YouTube at risk of becoming yesterday’s game, mired in copyright controversy. At least YouTube still has all that music video right? That’s safe right? Not quite.

Over the weekend Warner Music Group indicated it will pull its music content from YouTube after license negotiations broke down. YouTube’s current deals with all of the majors include per play and revenue share, and an equity stake which was given to each of them immediately prior to the Google deal closing. It seemed like a great deal at the time as the labels benefited from the sale and a key channel was legitimized and formalized. But now the dust has settled WMG feel that they aren’t getting the revenue commensurate with YouTube’s huge global audience.

There may be something in it. YouTube may have sold them short. But I suspect the bigger issue here is that WMG are feeling the impact of YouTube not being able to monetize their video content well enough. They’ve been experimenting hard with different ad tactics this year and they’ve yet to hit the right mix. Also, because of the much more variable quality of content and audience compared to the Hulu’s and ABC.coms they’re not able to generate as high CPMs as those sites do.

There’s no doubt social music isn’t generating enough money for the music industry yet. But one could argue that, acquisition revenue aside, it’s just not generating enough revenue full stop. Social has already become a vital part of the music discovery and consumption value chain. It will eventually become an important revenue generator too. But the record labels have to accept that this will be a comparatively slow process that is intrinsically linked to the broader maturation of social media as business.

3 thoughts on “Why Warner Need to Have Some Patience With YouTube

  1. I think that WMG is doing just as you say, searching for lost revenues in any place they can, and since Youtube isnt putting out enough money to make up the deficit that has developed over the last few recent years, they are tightening the noose on Youtube. I almost see this as in the old days where people got hung out of windows by their feet to get money they feel they deserve, done particularly well by managers and record labels in the 50’s and 60’s. Granted Youtube has had similar problems with copyright issues and the music industry was one of the last to jump on the bandwagon and get their money, industry professionals need to develop other means of regaining lost revenues rather than bending over sites such as Youtube for a bigger piece of the pie. Now, I am not saying that Youtube shouldnt be required to pay a fee for each copyrighted piece of material they post, but some sort of legal agreement needs to reached so strong-arming such as this wont take place anymore and in the end the people, who choose to use Youtube, can see and enjoy the products of WMG which I always thought was the ultimate purpose of music, to entertain fans. But, in our capitalist economy there is little room for communist ideals and free music or music video days are long gone. Hopefully some agreement can be reached because I personally use Youtube to find new music along with other sites and I enjoy using Youtube to expand my musical horizons as well as discover new bands for my job.

  2. I don’t know much about music industry.
    Re utube, only descendants in my quarters, so would they be responsible. What is seen on utube, mi a la puter ,or all?
    Am I private in bathroom and br?
    If only I knew where i wasn’t seen. feel less violated.

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