Warner’s demand that thousands of videos featuring their music be removed from YouTube gives artists another reason to think twice about signing with a major label. Two years ago, all four major labels signed a licensing agreement with YouTube that provides them with a per-stream fee for each video viewed (whether it is a video created by the majors, or one which is user generated), as well as a share of YouTube’s advertising revenue.

The existing deal is nothing to sneeze at. While it is unclear how much revenue Warner has taken in from YouTube, Universal has brought in “tens of millions of dollars” from their relationship with YouTube, according to Rio Caraeff, executive vice president of Universal Music Group’s eLabs. The problem is that Warner Music is not seeing the forest for the trees. In their quest to max out all their possible revenue streams, Warner is overlooking the fact that their music business is built on the backs of artists who need this connection with their fans to grow their base and further their career. Inserting a barrier into this process, where fans cannot add the music of their favorite artists to their homemade videos, or send around a new video to their friends, is not a good way to draw in new fans. And again, unlike traditional marketing outlets like commercial radio, YouTube is an emerging revenue stream as well. “It’s growing tremendously,” says Caraeff. “It’s up almost 80 percent for us year-over-year in the U.S. in terms of our revenue from this category.”

As Amanda Palmer from the Dresden Dolls writes on her blog “it’s abSURD. they are looking for money in a totally backwards way. money that, i should point out, i would NEVER see as an artist. if they got their way and youtube decided to give them a larger revenue share of the videos, it’s very unlikely it would ever make it’s way into the artists’ bank accounts.
i loved my videos. now they are gone. why is life so hard? did i mention that being on a major label is starting to seem like…..not such a grand idea?”

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    What can I say, I agree 100 percent!

    YouTube and MySpace are the two main places I go to look for artists I’ve heard of in conversation, mentioned in an article, on the net, etc. YouTube especially. I know many other people who do the same thing. So, I must say, I think Warner has shot itself in the foot. . . It wasn’t that they weren’t getting anything out of their artist’s presence on YouTube. In fact, they were part of what sounds like a quite lucrative deal. Warner simply feels they should get an even greater percentage. Unfortunately, their actions mean that it is far more difficult for members of the public to access their signed artist’s music. Personally if I can’t preview, I don’t buy. I hope that Warner comes to their senses before they do either themselves or their artists too much harm.

    There’s my two cents worth!
    Marja Ernst

    PS (I love the Daffy illustration)

    Hi Mary,

    Great points about previewing music – that is how I feel as well.

    Happy New Year!


    Don’t be too hard on Warner, sometimes it’s difficult to remember that $X + $0 (how much they were making with Youtube) is more than $0 (how much they were making before Youtube and, well, now).

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