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YouTube, WMG agree on new licensing deal

Content returning to video site after nine-month absence

By Antony Bruno, Billboard


Sept 29, 2009, 05:34 PM ET

DENVER -- YouTube and Warner Music Group made it official today, announcing a new content licensing deal that will bring the label's content back to the popular video streaming service after a nine-month absence.

The main difference of the new deal is that Warner will now be the one selling advertising around its videos rather than YouTube. This will allow the label to set its own prices for those advertisements as well as keep the majority of the ad revenues that result. YouTube will receive an undefined cut of all revenue under the terms of the agreement.

"We feel this is a sustainable model that works for both parties," says YouTube head of music Chris Maxcy. "It puts control and success of their future in their own hands."

Sources close to the deal say Warner plans to partner with other companies on the ad sales activity rather than hire a sales team in house.

In order to help create a premium environment around which to sell these ads, YouTube will allow Warner to create custom channels within the service dedicated solely to Warner artists.

"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," read a statement sent by Warner as the deal was announced.

The label will populate these channels with higher-quality video than is usually found on YouTube, and the two are developing some kind of branding presence that would help identify Warner videos from others, although exactly what that will look like is not yet clear.

Sources say Warner wants to include more commerce and social networking capabilities to a premium video player YouTube is creating for the label. This could include direct links to the artist Web sites, buy links and chat capabilities in addition to the premium ad space and other details.

Whether YouTube users will be able to embed Warner music videos from YouTube on other Web sites like they can now with regular videos has not yet been determined. Sources say if the premium experience can't be replicated through the embedding process, it may not be allowed.

YouTube users will be able to include Warner music in the videos they submit as well, around which the label can also sell ads if it chooses. Neither party would comment on whether an upfront payment was an element of the deal.

User-generated YouTube videos will not appear on the premium video player being created for music videos. But fans will have to wait for Warner's music videos to appear on YouTube before they can include the label's songs in their own videos, as the label wants to launch its music simultaneously across the service.

Warner pulled its music from YouTube last December. The label was the first to license its music to YouTube when the service first started negotiating with the music industry back in 2006. However when it came time to renegotiate that deal, Warner wanted to see more money coming in from YouTube that the company was willing to pay, leading to Warner's decision to withhold content from the service.

According to Maxcy, the new deal includes both recorded music and publishing rights through Warner Chappell. The comprehensive nature of the licensing deal added to the time needed to complete it, Maxcy says, adding that CEO Edgar Bronfman Jr. was directly involved in the negotiations.

Warner's music videos begin appearing back on YouTube in the months ahead, a process that YouTube expects will take the remainder of the year to complete. That includes the time it takes WMG to ingest its videos into the YouTube system, as well as the time it will take YouTube to finish building the premium video player and ad platform.

Getting its music back on the Google-owned video service is critical for Warner, given YouTube's sheer dominance of the online video space. According to ComScore, YouTube generated 10 billion streams in August from U.S. users alone. That's about 40% of the online video market.

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