Record Labels Look For Video Cash

With Warner Music Group ordering YouTube to purge the record label’s content, reports of a label-backed music video site indicate the recording industry has bigger plans than just collecting royalty fees from Web companies.

WMG recently ordered YouTube to remove content belonging to the label, including videos by Madonna, James Blunt and Red Hot Chili Peppers, when the label and the video site couldn’t reach a new fee agreement.

Photo: AP Photo / PA
An enthusiastic Anthony Kiedis is still in his Friday casuals when the Red Hot Chili Peppers play Hyde Park in London.

This leaves YouTube with major label-authorized content from only three of the Big Four record companies – Sony, EMI and Universal Music Group. What’s more, with agreements with all three remaining labels coming up for renegotiation, some label execs are wondering if their companies would be better served with a dedicated music video Web site instead of trusting their intellectual property to a company well outside the music business.

YouTube’s current deal with record labels is based on a “pay-for-play” system that pretty much functions as you might guess with the labels getting a fee for each video viewed.  However, YouTube wants a model where labels get a percentage of ad revenue instead, according to London’s Sunday Times.

Photo: AP / Canadian Press
Bell Centre, Montreal, Canada.

Meanwhile, the labels are thinking DIY when it comes to online video, with media-backed vid site Hulu being mentioned as the model.

Hulu’s business play is simple enough – acquiring video from content owners and showing advertisements with each viewing.  Of course, YouTube and Hulu are as different as Radiohead and New Kids On The Block. YouTube not only receives music-based content from the labels but also from individual users posting clips from their favorite concert DVDs, music segments from TV talk shows or last weekend’s musical guest performance on “Saturday Night Live.”

In other words, a music industry-backed, Hulu-like video site offers record labels more control over how their content is viewed as opposed to all the different ways music is presented on YouTube, as well as more control on how record companies would be paid for their wares.

Photo: AP Photo / The Canadian Press
Molson Amphitheatre, Toronto, Ontario.

“Why should we accept less from YouTube when there are better offers with Yahoo, MySpace, MTV and AOL?” one unidentified music exec told the Sunday Times, adding, “They just won’t be watching those videos on YouTube. There have been other hot brands on the Internet before. What’s Napster worth now? But these names come and go. Catalogues like Led Zeppelin or Madonna are more enduring.”