Warner Music Group has become the first major label group to sign a new deal with YouTube. And while WMG claims to have obtained better terms than previous Google contracts, its CEO also said the deal was made under “very difficult” conditions.
Here’s all you need to know about the WMG YouTube deal:
• Warner Music Group won some concessions including better ad monetization, according to several sources, along with better rates from YouTube Red, Google’s paid music and video subscription service. The deal is also shorter than previous 3 year deals. (more)
• In a leaked memo, WMG CEO Steve Cooper offered insights into this “difficult: negotiation: “We secured the best possible deals under very difficult circumstances. Our new deals are also shorter than usual, giving us more options in the future… Nevertheless, our fight to further improve compensation and control for our songwriters and artists continues to be hindered by the leverage that ‘safe harbor’ laws provide YouTube and other user-uploaded services. There’s no getting around the fact that, even if YouTube doesn’t have licenses, our music will still be available but not monetized at all. Under those circumstances, there can be no free-market ‘willing buyer, willing seller’ negotiation.” (full text of the leaked WMG memo)
• YouTube responded with a carefully worded non-answer that read, in part: “This new deal continues to capitalize on the growth in advertising revenue we’ve paid to the music industry – over a $1b paid out between November 2015 and December 2016 – and is an important step to enabling the international expansion of our subscription service, YouTube Red.”
• Lyor Cohen, YouTube’s Head Of Music, was less guarded in his reaction to WMG’s complaints: “I was surprised, because it’s not been the context or the tenor of the negotiations… This deal is centered around their vision of helping us build a subscription business. And them encouraging us building the advertising business… I didn’t hear anything about safe harbor, or any of that stuff … “
Cohen said the deal was also about global growth: “The expansion around the world. We need the rights in order to continue expanding around the world.”
• Will UMG and Sony sign on soon? “I’m encouraged by all the conversations that we’ve had,” said Cohen. “They recognize that YouTube has paid, in 12 months, over a billion dollars in advertising revenue alone. And they see subscription growing faster than any subscription category ever, alongside that. Remember there used to be an argument, a year ago, that our advertising funnel, was retarding the growth of subscription.” (more on recode)