Unable to renegotiate the share of ad revenue it sought, Warner Music Group has pulled all of its content from YouTube. Affected are thousands of songs and artists from WMG's extensive recording catalog, as well as, those published by Warner/Chappell Music who may not record for the company.
“We are working actively to find a resolution with YouTube that would enable the return of our artists’ content to the site,” Warner said in a statement. “Until then, we simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide."
Rights holders receive a share of the revenue from ads that run alongside the video - usually just a fraction of a penny. But with YouTube traffic mesured in the billions those pennies could amount to real revenue. Last week a Universal exec claimed that the label group's online video revenue could reach $100 million in 2008. Some insiders question the figure and point to drastically lower payouts.
COMMENTARY - WMG's move puts YouTube in a difficult position. The company is known to be in renegotions with all four major label groups and Google exces have signaled that labels should expect less revenue, not more.
Despite the popularity of user generated videos, a YouTube with major holes in its music library would be a less compelling site. As YouTube aknowledged Friday on its blog, its also frustrating to users who suddenly get a take down notice for use of backgorund music. But WMG and other labels should think twice before walking away from what has become a top destination for music discovery.
WMG fired a bold first shot in what could become a bloody war to set a value for music online. Let's hope this does not become another Napster with record labels overestimating their power or underestmating the rath of consumers who want what they want when the want it and in the digital age can find it somewhere else that doesn't generate any revenue at all.