YouTube Will Pay Warner Music Group Royalties

Revenue-Sharing Deal Covers User Videos Containing Copyrighted Content

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NEW YORK (AdAge.com) -- Winning over another would-be foe, YouTube has reached a revenue-sharing deal with Warner Music Group, which will now distribute and license its copyrighted content through the hugely popular video-sharing site.
YouTube will pay Warner Music royalties whenever one of its users uses the company's music in a video. Searching for Madonna under YouTube's music category yields 5,493 videos referencing the material girl.
YouTube will pay Warner Music royalties whenever one of its users uses the company's music in a video. Searching for Madonna under YouTube's music category yields 5,493 videos referencing the material girl.

Warner can now expect an undisclosed share of ad revenue whenever YouTube users stream a video containing the company's intellectual property. If, for example, an amateur auteur borrows a snippet of Madonna's latest video, or scores their short with a track from Missy Elliot's new album, Warner is now guaranteed compensation. To make this possible, YouTube developed a royalty-tracking system that detects when homemade videos are using copyrighted material.

Universal's lawsuit threat
The announcement comes less than week after Universal Music CEO Doug Morris threatened to sue YouTube over its failure to prevent copyright violations -- still a common reaction for record labels, movie studios and TV networks anxious to protect old business models.

More and more media companies, though, are reconsidering their positions on YouTube and its millions of daily users. Before Warner's about-face, the best example of this trend was NBC's decision in June to promote its fall lineup on it own YouTube channel.

"Consumer-empowering destinations like YouTube have created a two-way dialogue that will transform entertainment and media forever," Warner Music Group CEO Edgar Bronfman Jr. said in a prepared statement. "As user-generated content becomes more prevalent, this kind of partnership will allow music fans to celebrate the music of their favorite artists to reach consumers in new ways, and ensure that copyright holders and artists are fairly compensated."

Third-largest recording company
Warner Music ranks as the country's third-largest recording company with annual revenue of $3.5 billion. Besides it pseudonymous label, Warner Music Group includes Atlantic, Asylum, Elektra and Rhino. Warner is also using YouTube to distribute music videos.

Warner is not to first record label to experiment with YouTube; Capitol Records recently posted videos by The Vines, Cherish and OK Go on the site.

In August, YouTube drew 34 million unique visitors, up dramatically from 3.5 million at the start of the year, according to ComScore Media Metrix.
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