Warner Music Group, which is the third largest record label in the Big 4, has pulled all of its videos on its YouTube channel after talks of renewing a licensing agreement had broken down on Friday. Warner Music, along with Universal Music Group, Sony Music Entertainment (formerly known as Sony BMG) and EMI, are all renegotiating their deals with the Google-owned video site.
Warner Music, which is the home for artists including the rapper T.I. and Red Hot Chili Peppers, was the first major media company that negotiated and made a deal with YouTube. As well, as part of the original negotiation, Warner, Sony Music and Universal all took small stakes in YouTube before the site got acquired by Google, which allowed them to profit from the deal.
The deal gave the record labels a share of any ad revenue and a per-play fee associated with a video uploaded by them, or a video uploaded by a user (in the case for Universal’s deal). While the per-play fee is a fraction of one penny, according to Reuters; the millions of users watching videos on YouTube add up to a substantial amount.
"We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide," the record label said in a statement.
However, one source told Reuters that Warner Music’s music videos were “staggering low”. Out of the top 10 YouTube channels, 7 are music related. Warner Music is the 11th largest channel, according to CNET News. But, one record label has spoken out and said that it was making profits from the site that has no business model.
Universal Music, talking to CNET News, has said that it is expected to get nearly $100 million in revenue from video streaming from deals with YouTube, MTV, MySpace and iMeem – but most of the cash is coming from its videos from YouTube.
"It’s really coming to fruition I think in part due to YouTube’s recent focus on monetization," said Rio Caraeff, who is the executive vice presidents of Universal Group’s eLabs group, “and really trying to drive revenue around premium content more so than they have in the history of their short existence. They have finally turned their spotlight on ‘How do we turn this into a business?’ And that’s benefiting the entire ecosystem of content owners as well."