Warner silences music on YouTube

 

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By Reuters

Posted on 22 Dec 2008 at 08:33

YouTube has been ordered to pull all Warner Music videos from the site, after contract negotiations between the two companies broke down.

The talks fell apart because Warner wants a bigger share of the huge revenue potential of YouTube's visitor traffic. There were no reports on what Warner was seeking.

"We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide," says Warner.

Music companies typically get paid a share of any advertising revenue associated with the video and a per-play payment for every video viewed. The per-play fee is usually a fraction of a penny and with millions visiting YouTube everyday it was all expected to add up to a substantial amount.

But a source familiar with Warner Music's talks said the amounts it has been receiving from YouTube were "staggeringly low".

The report contrasts with an earlier story that suggested music labels were making "tens of millions of dollars" a year from YouTube and that the video-sharing site was finally beginning to earn its keep.

YouTube executives have spent most of 2008 stepping up efforts to develop revenue streams on the site partly in a bid to keep content partners happy.

"Despite our constant efforts, it isn't always possible to maintain their innovative agreements," says YouTube. "Sometimes, if we can't reach acceptable business terms, we must part ways with successful partners."

YouTube also has agreements with Universal, Sony and EMI. Warner's move could see them also making tough demands for higher fees.

The demands could leave YouTube in a difficult position as it tries to balance the need to pay a reasonable fee to content partners, including TV and movie companies, and also generate enough return on the substantial investment needed to keep streaming millions of videos around the world.