wax&wires

Warner Orders YouTube to Pull Videos

Contract negotiations between Warner Music Group and YouTube broke down last week prompting Warner to order the removal of all WMG content from YouTube. The order pertains not only to artists currently on Warner Music’s major labels, but also extends to all songs published on Warner/Chappell music.

Warner was the first major media company to negotiate a contract with YouTube back in 2006. Warner, along with Universal Music Group and Sony Music, took stakes in YouTube back in that same year as part of contract negotiation deals, and profited when Google purchased YouTube for $1.65 billion shortly thereafter. Warner feels that their 2006 contract brought legitimacy to YouTube, strongly contributing to the Google acquisition.

YouTube currently pays WMG on a per-play basis. WMG has argued that numbers negotiated in 2006 are no longer applicable given the success of YouTube and Warner’s perceived role in that success, and is  thus seeking a higher revenue per play.

“We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide,” Warner claimed in the official statement released on Saturday.

With over 100 million video views per day and 13 hours of content uploaded every day, YouTube accrues huge bandwidth expenses of over $1m each and every day. Undoubtedly, YouTube sees their service as an assett to WMG and wants to keep more of the revenue for footing the tab on those huge bandwidth bills and operational expansion.

Now that WMG has begun pulling content, many expect Sony and UMG to follow suit in demanding higher rates per play at the threat of content removal. Should that come to fruition, it would undoubtedly hamper YouTube’s efforts towards being the one hub on the net for all things video. The bigger question from there is, who will the labels turn to to host their content?

This entry was posted on Saturday, December 27th, 2008 at 8:55 pm. It is filed under wax and tagged with copyright, industry, record labels, royalties, videos, warner music group, youtube. You can follow any responses to this entry through the RSS 2.0 feed.