Why Warner Music Signed a Contract with YouTube

When two giants get together everyone hopes it is for the best. In May 2017, Warner Music Group has a signed a new deal with YouTube. Interestingly, it’s not happy about it. As Warner Music CEO Steve Cooper said they renewed a deal “under very difficult circumstances.” Let’s back up for a second.

Warner Music Group

Warner Music Group is an American multinational entertainment and record label conglomerate headquartered in New York City. It is one of the “big three” recording companies and the third largest in the global music industry. It is next to Universal Music Group (UMG) and Sony Music Entertainment (SME). WMG is the only American music conglomerate worldwide. Time Warner formerly owned WMG. The company was publicly traded on the New York Stock Exchange until May 2011, when it announced its privatization and sale to Access Industries. The deal was completed in July 2011. Let’s not forget to mention that the company has a multibillion-dollar annual turnover. WMG employs in excess of 3,500 people and has operations in more than 50 countries throughout the world.

The company owns and operates some of the largest and most successful record labels in the world, including its flagship labels Warner Bros. Records, Parlophone and Atlantic Records. WMG also owns Warner/Chappell Music, one of the world’s largest music publishers.

YouTube

And what about YouTube? It is an American video-sharing website headquartered in San Bruno, CA. Google bought YouTube in November 2006 for $1.65 billion. So now YouTube operates as one of Google’s subsidiaries.

As you may know, the site allows users to upload, view, rate, share, add to favorites, report, and comment on videos, subscribe to other users, and it makes use of WebM, H.264/MPEG-4 AVC, and Adobe Flash Video technology to display a wide variety of user-generated and corporate media videos. Available content includes video clips, TV show clips, music videos, short and documentary films, audio recordings, movie trailers and other content such as video blogging, short original videos, and educational videos. In the last years, YouTube also became a great stop for advertising. If you own a company and are thinking of online platforms to do your marketing, YouTube can be one of them. Read more about killer marketing strategies for your small business.

So what is the deal with WMG and YouTube?

The new pact that they made in 2017 is a short-term deal. It gives Google’s video site continued access to Warner’s official music videos. The reason why Warner was not happy with the deal is one. YouTube has the protection of the Digital Millennium Copyright Act and some other rules, which give it substantial flexibility when it comes to copyright claims.
But this is not something new: Warner has significant history with YouTube. The music company became the first major to license the video platform in September 2006. In 2008, Warner actually left YouTube by pulling out its content from the site and left YouTube legally unlicensed. But the story did not end there. Only nine months later Warner publicly announced that its music would be returning to the platform.

Steve Cooper, WMG, said “Out fight to further improve compensation and control for out songwriters and artists continue to be hindered by the leverage that “safe harbor” laws provide YouTube and other user-uploaded services.” He also explained that the new agreements are shorter than more typical terms. The typical ones tend to run to three years. The new agreement between WMG and YouTube will expire after a year or two.

And do you want to know the story from YouTube’s side? A YouTube rep. commented, “After months of negotiations, we are pleased to say we’ve renewed our deal with Warner Music Group, Warner/Chappell, and PEDL. This new deal continues to capitalize on the growth in advertising revenue we’ve paid to the music industry, over a $1b paid out between November 2015 and December 2016, and is an important step to enabling the international expansion of our subscription service, YouTube Red.”

Well, what can one say: good luck to both companies.

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