Sources: YouTube, not Warner Music, pulled videos

Warner Music Group has been saying since Saturday that it was the one who asked that the label's videos be removed from YouTube after talks to renegotiate its licensing deal with Google's video site stalled.

That's not what happened, say two high-level sources with knowledge of the negotiations.

YouTube began removing videos from its site after Warner came to YouTube with an "11th-hour demand" for better financial terms, according to the sources. All four of the top recording companies are renegotiating their contracts with YouTube for music and music videos.

Managers at the Web's largest video site considered Warner's demand. The label received its answer when YouTube began pulling videos. YouTube also beat Warner to the punch by firing the first public relations volley when it notified the public of the split by posting a note to the company's blog. Ever since, Warner's PR people have been busy trying to get their side of the story out.

Perhaps that's why headlines have resurfaced about how all four of the top labels are interested in building their own YouTube competitor, and how YouTube isn't driving much money to the record companies, and how Warner's departure may be a bad signal for YouTube.

None of that is accurate. Here's what my music industry sources said: the labels have not made any serious plans to build their own music-video site, at least not those that have tallied big returns from video streaming and YouTube. I reported earlier this year that Universal had considered a video site, but the plan hasn't gone anywhere since.

As for the kind of revenue YouTube is delivering to the labels, Silicon Alley Insider reported that Universal Music Group is making as little as $25,000 a month on ad revenue fees. That is flat out wrong, my sources said.

An executive with Universal Music Group told me on the record last week that YouTube has made the No. 1 music company "tens of millions" of dollars this year. I reported, as did Peter Kafka at All Things Digital, that Universal is on track to book nearly $100 million in video-streaming revenue this year. Some of that money comes from other services, but the source said 80 percent is from YouTube.

By all indications, Warner overplayed its hand. YouTube can afford to let Warner walk. The vast majority of music listened to at YouTube comes from the two largest recording companies: Universal and Sony BMG. Universal, the label that represents U2, Kanye West, and The Rolling Stones, is the most-viewed YouTube channel all time with more than 3 billion views. Sony BMG is a distant second with 491 million views.

Warner isn't even in the top 10. The record company's 278 million views is good enough only for 11th place.

So it appears that some labels are happy with YouTube money and Warner is not. According to my sources, some of Warner's problems with the Web's No. 1 video site are of its own making.

[Argyll]

Sounds like the same kind of crap that Warner, and other music labels, have tried to pull with Apple at the iTunes store. Glad to see that YouTube has the same kind of guts that Apple does and to tell them to go to hell. You need us more than we need you! Let the music labels hang themselves!

[t8]

The record companies are so owned.
They abused their power by ripping off artists, and now they are losing their power.
Has any corporation ever thought that by playing fair that you might be in business longer?
Maybe Google?

[open-mind]

Brilliant idea Warner. Spend millions creating a YouTube clone that nobody will use and won't make you a dime. That way, evil YouTube can't pay you millions to provide that same service.

So why is the music industry in decline? I just don't get it.

[ittesi259]

Oh wow....thats right record companies....YouTube basically said screw off! Well at least to Warner.

Warner: Resistance is futile....
YouTube: Whatev *pulls down all warner's music*
Warner: Does not compute
YouTube: Try getting paid per play and ad revenue now *******!

[YankeePoodle]

I like Google, but I would reserve my judgment only after knowing the 11th hour demand. Yeah, I know the 11th hour demand may sound outrageous in any negotiations, but who knows Warner thought it was getting short-end of the stick and wants to have their piece of the pie.

What Hulu has demonstrated is that you can create a competitor of YouTube and thrive. So, it is not bad idea for all the music guys to have a single site of their own.

[badasscat]

Who says Hulu is "thriving"?

[Lerianis]

A lot of people say that Hulu is thriving. They offer a lot of shows that Youtube cannot offer, at a higher bitrate, and quicker.

[David Turner]

Lerianis:

But only to the US and there is a lot more people in the whole world then just the US population

[myles taylor]

You know though, the main people who suffer from these struggles is us as the consumer. I hope they work this out and can get back to delivering content.

[ddesy]

The consumer will keep getting the short end of the stick unless people and companies like Google stand up to the music industry. The music industry doesn't seem to have realized that the game has changed.

[orthotox]

Good to know. Thanks, man.

[We7Stevep]

Consumers have never been in a better position to be able to demand delivery of their music the way they want to consume it because the only way to rival music and video piracy, is to offer the consumer what they want for free, monetising content in a different way - cue ad-funded models like We7.

Steve Purdham
CEO - We7

[Fiale]

Warner have just shot themselves in the foot - I am sure a lot of revenue is more passive from youtube, for example I have bought several CD's and downloads when hearing soundtracks to videos I have enjoyed (mainly gaming videos) I recently bought the enitre back catalouge of Karl Jenkins ( a WMG artist) after Adiemus as the background to a lovely video -

So record companies I imagine make a hell of a lot via people just reading the comments / acknowledgments and going out to purchase games / videos they have seen on YouTUbe. It would appear that if all WMGs music is pulled from Youtube that they will not see as much of my cash in the future - which is a real shame.