making the internet music business a flatter pancake

The business of online media is becoming a thinner stack, as the Warner deal with YouTube shows. When Warner both provides the media and sells the ads, it’s using YouTube as a web app rather than as a reseller. YouTube is there to provide support technology along the same lines as webmail or Google docs.

Here’s a comment by mirchi on the post about the Warner/YT deal:

The major labels, in moving to the web, decided it made … sense to participate directly in the business being built around the content (thru per stream royalties and/or ad revenue share). This was the case under the old Warner deal – what’s changed here is who’s selling the ads/setting the prices (and of course the rev split).

The majors haven’t been happy with the revenues YouTube has been able to generate so have taking the sales function out of the hands of YouTube. This is similar to the Vevo and Hulu models in that the content owner controls the ad inventory around the content (regardless of where it’s distributed).

This (theoretically) addresses the consumer demand for ubiquitous distribution of content and the content owners’ interest in creating a scarcity of ad inventory (something that isn’t achieved under the model of licensing one’s content to multiple parties who are each free to sell advertising around it).