YouTube Cuts Warner Music Deal as Video Wars Intensify

Posted on September 19, 2006

YouTube has managed to continue to grow even while facing mounting competition from Internet giants. Google, Yahoo, MSN, MySpace and AOL all have video sharing services. There are also dozens of other independent video sharing services.

Recently, YouTube was also threatened over music video copyrights by Universal Music Group. However, Warner Music has stepped in and made a deal with YouTube.com. It is significant that YouTube cut a deal with Warner Music but it is still unclear what the new content identification concept means specifically for people that upload videos containing copyrighted songs from Warner Music.

Mark Cuban at BlogMaverick.com says the devil is in the details.

Obviously the devil is in the details. We dont know what the percentages are. We dont know how capable a salesforce Youtube has. We dont know what percentage of revenue their streaming costs take up (remember, streaming costs per bit dont go down as volume goes up, they go up at very high volume levels) and we dont know just how diligent they are going to have to be for Warner MG to recognize WMG copyrights.
Think about it. In order for them to recognize a copyright violation in the bar mitvah tape, they first have to identify any and all songs, then they have apply that to a list of WMG songs. That aint going to be cheap to do.

A Forbes article has a few more details about how YouTube will handle copyrights as part of the Warner Music deal.

Here's what YouTube and Warner have been willing to say: Warner will let YouTube show "thousands" of its artists videos, and will also allow YouTube to play user-created clips that incorporate Warner music--such as "Christine" lip-syncing in her bedroom to Madonna's "Material Girl." In exchange, Warner will get a cut of any advertising revenue that YouTube makes while showing said video. YouTube also promises to implement a filtering technology by the end of 2006 that keeps approved content on the site and banishes unapproved clips.
YouTube wouldn't discuss its technical plans (or anything else beyond a press release issued Monday morning), but Alex Zubillaga, who heads up Warner's digital division, confirmed that the company plans to implement a "fingerprinting" system that automatically identifies content and matches it to a master list that Warner will help create. If Warner wants to let someone use Led Zepplin's "Stairway to Heaven," it will stay on the site; if not, YouTube will take it off.

Cuban is correct that YouTube has thrived by allowing copyrighted content to be uploaded. Cuban writes, "Take away all the copyrighted material and you take away most of Youtube's traffic."

That's true as well but not every content owner is going to want their content removed. They might be filmakers looking for broader exposure or just videobloggers having fun. Recently more and more original content has been appearing on YouTube.com. Examples include the widely discussed short fiction from lonelygirl15 and the "New Numa Numa" song from Gary Brolsma. YouTube is also home to a growing number of videobloggers.

If YouTube can continue to be innovative while avoiding major lawsuits and fending off the competitors they may have a bright future. The deal with Warner Music may be a small step that helps keep YouTube buzzing with videobloggers. However, if they do lose their position as the most well-known video sharing service they may also stop being the first site new video content creators turn to. There's also that really big bandwidth bill which shouldn't be overlooked.