interesting outcome of Warner Music/YouTube standoff

Music videos started out as a tool to market the song. But now the song is marketing the video.

Warner’s Music Returns to YouTube Following Nine Month Hiatus

Under terms of the “just-signed” deal, Warner will be responsible for selling advertising against its own videos, so it will decide how much to charge for ads and find ad buyers on its own, rather than settling for whatever Google decides on. In order to attract premium advertisers, Warner plans to create a separate channel within YouTube consisting only of “premium” content. … The reason for the label’s change of heart — in addition to its bet that it can make more from ads than YouTube paid out before — has to do with a shift in thinking about audio on the web. Music services that rely on video, such as YouTube, enable advertisers to display video ads in ways that don’t apply when a user is listening to the same music on an audio-only platform. (The music-streaming service Pandora recently launched a small video section, most likely for the same reason.)

2 thoughts on “interesting outcome of Warner Music/YouTube standoff

  1. It’s always worked both ways (video marketing the song/song marketing the video) – the video networks (to the extent they still play videos) program videos largely based on radio airplay of song. The difference is the major labels, in moving to the web, decided it made more 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).

  2. Mirchi, thanks for this insightful comment.

    It seems to me that having a number of parties selling ads against the same syndicated content is precisely what isn’t working with ad-sponsored streams.

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