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Interesting deal brings Warner back to YouTube
By CMU Editorial | Published on Wednesday 30 September 2009
As expected, YouTube and Warner Music have both confirmed that music videos from the latter are to reappear on the former’s website. As previously reported, Warner ordered the Google-owned platform remove all of its content from the video service at the end of last year when the two companies failed to renew their licensing agreement after a dispute over royalty rates.
The nature of the deal that has finally been struck between the two companies is interesting. Warner Music will now sell the advertising that sits next to its content on the YouTube platform giving a cut to Google, rather than Google selling the ads and giving Warner a share.
That arrangement will test the belief by some major label execs that the Google-owned video site is selling its advertising at a below market rate. Whenever YouTube argue that they just can’t afford to pay the royalty rates demanded by record companies or music publishers based on the income they get from advertising, some of those content owners argue that because YouTube mixes up official pop videos with user-generated clips of someone falling off a chair they can’t charge the ad rates that the official music content could actually demand.
YouTube presumably have no interest in carving up the content uploaded to their site into strands and selling advertising at different rates for each one, so have seemingly said to Warner “if you can sell ads next to your content for more money, by all means be our guest”.
In some ways Warner’s new deal with YouTube is a ‘lite’ version of Universal Music’s grand Vevo plan. Vevo will be a new video website, that repurposes Google technology, and only hosts official music videos as uploaded by record companies. Universal will sell the advertising, and presumably demand more money than YouTube do on the basis that “we only have official content here, thank you very much”.
Of course both Warner’s new YouTube deal and Universal’s Vevo plan assume that the major record companies can sell advertising, which may as yet prove to be the flaw in the plan. Say what you like about Google, but one thing they do have in house is online advertising sales expertise. I could be wrong, but I don’t ever remember being introduced to the online sales team whenever I’ve called in at Universal or Warner’s HQs. Word has it Warner hopes to strike an alliance with a sales or media company to help sell the advertising on its YouTube channels.
Confirming the new deal, YouTube’s Head Of Music Chris Maxcy said: “We feel this is a sustainable model that works for both parties. It puts control and success of their future in their own hands”.
Warner will be utilising the next generation YouTube video player which apparently offers more functionality, both for the user, and commercially. There is some doubt, though, that the enhanced player will be able to be embedded on other websites, certainly initially, which would be a major functionality fail.
Confirming their YouTube plans now their new deal is in place, Warner said in a statement: “Members of the YouTube community will not only be able to access videos and other music-related content from Warner Music Group recording artists and songwriters, but will also gain access to an enhanced user experience on YouTube with a feature-rich, high-quality premium player and enhanced channels”.
Other content owners will probably be watching Warner’s YouTube adventure with interest. To be fair to Warner, they were the first major content owner to strike a licensing deal with YouTube back in the day. With many content companies believing video sites like YouTube are undervaluing their content by sticking it next to UCG and selling advertising dirt cheap, if Warner can make the new ‘we’re in control’ system work, other content firms may follow suit.
