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Business News Digital Labels & Publishers
YouTube making majors millions
By CMU Editorial | Published on Friday 19 December 2008
The Exec VP of Universal Music Group’s eLabs division has said the major is seeing tens of millions of dollars of income coming in from YouTube, suggesting the video sharing platform that for a time was home to a plethora of unlicensed content uploaded by punters is now becoming a valuable earner for those content owners who have entered into licensing deals with it.
To their credit, after making a few threatening phone calls about copyright infringement in the early days of YouTube, after nearly every music video ever made was grabbed off MTV etc and posted on the site by punters around the world, the four majors quickly agreed licensing deals with the leading video sharing service, scoring upfront payments, equity stakes and ongoing ad revenue every time one of their videos is watched on the service (oblivious of whether they actually uploaded the video themselves).
Commenting on the value of YouTube to the majors, Universal digital man Rio Caraeff told CNet: “[YouTube] is not like radio, where [airplay] is just promotional [which it is in the US where radio stations don’t pay royalties]. It’s a revenue stream, a commercial business. It’s growing tremendously. It’s up almost 80 percent for us year-over-year in the US. in terms of our revenue from this category. Doug Morris, Universal’s CEO, has led the industry to set up videos as a revenue stream. Since 2005, Universal has gone from making zero dollars on music videos to nearly $100 million [a year]”.
Of course that $100 million comes from all the online video services that have sprung up in the last few years, though insiders say YouTube does account for a sizable portion of it. Caraeff’s comments follow remarks made by Nettwerk Music boss Terry McBride earlier in the year when he revealed Avril Lavigne could expect to earn two million dollars from her YouTube royalties.
Such remarks offer some optimism for both the web and music sectors in a market and economy more used to doom and gloom.
It suggests that YouTube owners Google are successfully establishing their video platform as a viable ad-funded service, and that in doing so the record companies have a valuable new revenue stream to help them overcome the continued slump in CD sales.
Music is by far the most successful content type on YouTube, with Universal and Sony having the biggest channels on the video site, which also means that the content industry which was first hit hard by the threats and fundamental culture-change brought about by internet may be the first to truly benefit from the business potential the net has always offered.
Of course there’s the argument that the big and blanket licensing deals between record companies and the likes of YouTube, meaning all music is available on demand all the time, will ultimately hinder the expansion of pay-per-track digital music platforms. And there’s the ongoing concern that smaller labels and artists might not get their cut of the action.
But hey, let’s lead the final Daily proper of 2008 with some optimism shall we. Record companies make millions from the internet. Hurrah.
