The Warner Music/YouTube Breakup and the Future of Online Video
As a major label struggles to maintain revenue streams in the digital age, will artists ultimately suffer?
Last Christmas Eve, singer Amanda Palmer posted a message on her blog: “If you hadn’t noticed, all of the Dresden Dolls and Amanda Palmer official videos have been taken off YouTube. I loved my videos. Now they are gone…Did I mention that being on a major label is starting to seem like…not such a grand idea?”
Palmer, who records for Roadrunner Records, is one of hundreds of Warner Music Group artists — including Madonna, Green Day, and the White Stripes — whose music videos are no longer available on YouTube. The reason? Money. YouTube’s licensing agreement with WMG expired in mid-2008, and after Warner pushed for a bigger slice of the site’s ad-revenue pie, YouTube said no thanks. The disruption incensed YouTube’s users and laid bare the record industry’s frustrated struggle to turn massive exposure into tangible profits.
Like many artists, Palmer says YouTube has been instrumental in shaping her career. “I’d post unreleased solo songs and think nothing of it,” she says, months after her blog rant. “But then I’d play those songs live and see hundreds of people singing along. You can’t argue with that.” Australian singer Sia also says she relies on the site for fail-safe exposure. “Lord knows, without Perez Hilton and Kanye West linking my videos from their blogs, I would have sold a fuckload less albums,” says the Hear Music artist. One-woman band Theresa Andersson went from fledgling upstart to Conan O’Brien musical guest after YouTube featured her homemade performance clip for “Na Na Na” on its home page. “Whether it’s Beyoncé or me, we find our audience on YouTube,” Andersson says.
Warner’s decision doesn’t just affect signed musicians: millions of people who have posted amateur videos featuring songs by WMG artists like Gnarls Barkley and R.E.M. had their work deleted, as well. Heated protest videos appeared, including one by Rob Ruben (a.k.a. TygerWDR), in which he animatedly explains the situation and advocates fighting back by inundating both companies with faxes. “Internet users don’t see borders,” Ruben says. “We tend to look at everything as ‘It’s out there; we can use it.’ ” While he understands the underlying licensing issues, he’s also aware that YouTube is making money from the ads that appear alongside his and others’ homemade videos.
Money that Warner, apparently, wasn’t seeing enough of. in December, The New York Times reported that less than 1 percent of the label’s $639 million in digital revenue in 2008 came from YouTube — despite the estimated one billion views their artists’ videos had amassed. Warner was the first major label to ink a deal with YouTube, in September 2006, barely a month before Google bought the site for $1.65 billion. Universal and Sony BMG announced deals at the beginning of October — when rumors of the acquisition were stirring — and likely made more lucrative arrangements as a result. In fact, in December, Universal executive Rio Caraeff told tech website CNET that Universal was bringing in “tens of millions of dollars” from YouTube. And sources at YouTube confirmed that Sony BMG recently renewed its partnership, negotiating a new multiyear deal.
While no other label has followed Warner’s lead, the question remains whether sites like YouTube can sustain their breadth of content without further public confrontations with financially frustrated copyright holders. Theresa Andersson, for one, hopes it can. “I understand that a label that spends a lot of money would need to see some come back,” she says, “but that’s the old way of doing things.”