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YouTube and Warner reach music deal

So in contrast to Universal's threat of legal action, Warner Music will put its entire music video collection on YouTube according to the Associated Press. The Warner deal gives YouTube users access to the music videos and the ability to remix these videos with their own content. This seems like a promising direction in bringing all media entertainment through this new distribution channel. NBC and Capitol Records have already made use of YouTube's broad reach to promote their content.

As I always said, traditional media and entertainment companies need to suck it up and embrace web 2.0. Ever since the launch of Napster, these companies have lost their stringent control over distribution channels and need to be more innovative in getting the consumers to pay for their content. As a frequent YouTube and Bittorrent user, I enjoy the fact that I can access and sample almost any form of entertainment without risk of hating something strange. If I like it or love it, I will buy the record, DVD, or other digital medium that the content comes in. I am a proud owner of way too many CDs, DVDs, etc. for my own good, but I do have a sense of righteouness when it comes to intellectual property rights. (It also helps that CDs and DVDs usually have the content in much higher quality than what can be distributed online.)

Now back to the actual point of this entry, how are Youtube and Warner going to make money? From the looks of the revenue-sharing business model, it looks like they are banking on making money through advertising revenue when these music videos and/or amateur videos with copyrighted content are viewed?

What happens if the amateur video did not make an "appropriate use" of the copyrighted material? According to YouTube, the site has installed a royalty tracking system so that the company can review any amateur video that uses its copyrighted content.

It looks like YouTube wants to remain independent, yet there are some rumors about a YouTube IPO... (see here) YouTube did hire Gideon Yu, Yahoo!'s former Treasurer, as its CFO. The company also took away some more of Yahoo!'s talent such as Rob Solomon, VP of online shopping, and Tony Nethercutt, Yahoo!'s National Sales director.

Hmm... YouTube won't be as big as Google. However, with its ridiculous traffic growth rate, it may be the company to watch in the near future.

posted by Koh @ 2:37 PM