December 22, 2008

Warner Music Asks YouTube To Remove Its Content

Last week, negotiations broke down between Warner Music Group and YouTube over licensing fees resulting in Warner ordering its music and videos to be pulled from the popular internet site over the weekend.

YouTube alerted its users about the collapse in the talks on its blog, saying that videos containing Warner songs and videos would soon disappear from the site.

Warner Music, which is home to popular acts such as Madonna, T.I. and Red Hot Chili Peppers, issued a statement on Saturday saying it was hoping to find a resolution with YouTube to return its artists content to the website.

Warner is seeking a larger share of revenue generated from YouTube's massive visitor traffic.

"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," Warner said.

YouTube executives have devoted many efforts into developing new streams of revenue from the site to keep content providers happy. 

"Despite our constant efforts, it isn't always possible to maintain their innovative agreements," YouTube said. "Sometimes, if we can't reach acceptable business terms, we must part ways with successful partners."

In 2006, Warner became the first of the major labels to strike a licensing deal with YouTube.  Warner executives believe its deal with YouTube lent legitimacy to the website, setting the stage for Google's $1.65 billion buyout of YouTube.

Warner, Universal Music Group, and Sony BMG Music Entertainment all received small stakes in YouTube pre-acquisition and profited from the Google buyout.

According to the agreements, the labels collect a minimum fee of less than a penny each time a video is watched, or a spilt of advertising revenue if that sum is greater.

Warner's move could lead the other major labels to also demand higher fees.
YouTube could be left in a difficult position trying to balance the need to pay fees to content partners, and the need to make profit to keep streaming videos online.


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