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Warner Makes Nice with YouTube

Posted by: Douglas Macmillan on September 29, 2009

On Tuesday, Google announced that music videos by Jay-Z, Madonna, Green Day, and other Warner Music artists will return to YouTube after a nearly year-long breakdown in negotiations between the companies. The latest deal brings all four major music labels into revenue-sharing arrangements with the world’s largest video site.

Warner became the first major label to partner with YouTube in 2006. But last December, its music videos began disappearing from the site, a sign the label was unhappy with the amount of revenue it was collecting from the partnership. YouTube’s vast library of unpredictable and sometimes objectionable user content has made it difficult for Google to place ads next to more than 9% of videos, according to eMarketer’s estimate.

Google says the new deal allows Warner to sell ads against its own music videos, as well as user-generated videos that contain clips of its songs. “This sets us up for a sustainable partnership going forward,” said Chris Maxcy, head of music partnerships at YouTube, during a call with reporters. Maxcy credited Warner Music CEO Edgar Bronfman with taking a personal role in the latest deal.

The arrangement leaves Warner out of Vevo, a separate music video site which YouTube first announced with Universal Music in March and which Sony signed on to in June. Presumably, Warner couldn’t come to a financial agreement with Vevo, or else didn’t want to lump its videos together with those of other labels in a kind of online portal for music videos. No new details on the planned launch of Vevo were announced.

The deal sees Google continuing to take steps to wring profits from the video site, which Credit Suisse analysts earlier this year estimated loses nearly half a billion dollars annually due to the high cost of technology needed to run it. In April, YouTube introduced new sections of its site for professional TV shows and movies, and earlier this month the company was said to be in talks with Hollywood to charge for rented movies on its site.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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