Warner and YouTube agree to music video deal


When YouTube and Warner failed to reach a licensing agreement last December, the music group removed all of their music videos from the beloved website. Talks have since resumed, and the two are close to completing a deal that will put videos from Madonna, Green Day, and label-mates back on YouTube.

What hasn’t been reported, so far: The deal terms themselves. Neither company is talking, but sources familiar with the negotiations tell me the new pact will be similar to the one Google’s (GOOG) video unit struck earlier this year with Universal Music Group.

That deal created Vevo, a sort of “Hulu for music videos” owned by Universal and Sony (SNE). So think of Warner’s deal as a “son of Vevo”.

The big idea is the same: Try to create more value for videos by limiting their distribution and creating a more ad-friendly atmosphere around them, and share ad revenue between YouTube and the videos’ owner.

Then there’s the ad platform itself: I haven’t been able to get a concrete definition of what this is supposed to look like , but for now I’m imagining something like the “channels” YouTube has made for partners like ESPN, except they’d be made on an artist-by-artist basis.

All in all, this sounds like a fair deal. Warner loses a guaranteed revenue stream, but if its contention about the value of its videos is correct, it will make even more than it did under the old arrangement. Meanwhile YouTube gets to hang onto “premium” inventory, without being locked into the kind of pay-per-play arrangement that helped drive the site’s expenses sky-high.

While it’s unclear when Vevo will launch, remember that the site will only stream videos from Universal artists. This potential deal with Warner will keep its content on YouTube. Of course, this is all subject to change.


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