Speculation surrounds Warner Music Group's decision to pull its music videos from YouTube after a breakdown in licensing negotiations between the two companies. Here's WMG's statement on the situation:
“We are working actively to find a resolution with YouTube that would enable the return of our artists’ content to the site. 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.”
And here's YouTube's:
“Despite our constant efforts, it isn’t always possible to maintain these innovative agreements. Sometimes, if we can’t reach acceptable business terms, we must part ways with successful partners. For example, you may notice videos that contain music owned by Warner Music Group being blocked from the site…”
The news comes at a sensitive time for YouTube, when it's renegotiating its deals with several labels, and trying to convince them its business model can be a lucrative earner for the music industry. That said, at least one other major label seems pretty happy – last week UMG said it was earning “tens of millions of dollars” from YouTube.But some context to the fallout between WMG and YouTube may be provided by this story on the Silicon Alley Insider blog, suggesting that all four major labels are considering setting up their own joint-venture online music video site. The model would be Hulu, the online TV site set up by News Corporation and NBC Universal.The key behind the labels' discontent, the article suggests, is that YouTube wants to shift its licensing deals away from pay-per-play licensing, and towards sharing revenues from ads in and around the music videos. But the problem is that the labels still make much more from the pay-per-play licensing elements of their deals.Could the labels do any better at monetising their videos through advertising? The Hulu theory is all about maintaining quality of content – i.e. not having a site clogged up by advertiser-unfriendly user-generated vids. In that sense, perhaps a music Hulu could make a better fist of things than YouTube.Then again, the fact that this joint-venture idea has become public this week could just be an example of the labels playing hardball with YouTube, in the aim of bagging licensing deals more to their liking. The big question, as ever, is who will blink first.