Six months ago, talks between Warner Music Group and YouTube over the licensing of the label's music videos broke down, and since then, anyone looking for official clips from acts such as The Red Hot Chili Peppers, Death Cab for Cutie, and Green Day has likely been disappointed.
That presumably could change as the companies have entered into a new round of talks, according to two sources with knowledge of the negotiations. While the companies have spoken several times over the past half year, the most recent discussions are more serious, the sources said.
No deals have been worked out and there's a long way to go before any agreement is reached, said the sources. But they added that the mini-cold war between YouTube and Warner Music may be thawing.
Representatives from Warner Music and YouTube declined to comment.
The two sides parted ways last December as YouTube was trying to renew its licensing agreement for Warner Music's videos.
The impasse was a result of Warner's insistence on a deal that was in line with the terms offered to competitors. Another music industry source said the disagreement between YouTube and Warner Music was much more complex than that but declined to elaborate.
Since December, YouTube has struck licensing deals with all the other three top recording companies, Universal Music Group, Sony Music, and EMI. YouTube would likely be glad to once again be able to offer videos from all the majors. Warner artists would likely welcome a return to YouTube and the exposure the Web's No. 1 video site offers.
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.
Negotiations between Warner Music Group and YouTube over renewing the licensing agreement for the record label's music videos broke down Friday. Early Saturday, Warner, the third largest record label, removed videos from the Google-owned video site.
The impasse comes at a time when all four major labels, including Universal Music Group, Sony Music, and EMI, are renegotiating their licensing deals with YouTube.
"We are working actively to find a resolution with YouTube that would enable the return of our artists' content to the site," Warner said in a statement. "Until then, we simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide."
YouTube has become an important revenue stream for at least one of the top labels. This week, Rio Caraeff, Universal Music's digital chief, told CNET News that YouTube has generated "tens of millions" of dollars for the recording company this year, up 80 percent from last year.
Caraeff said that Universal and YouTube enjoy a strong relationship and that the companies are trying to expand their relationship beyond music videos. A source close to Universal said that the label will likely book nearly $100 million in video-streaming revenue--most of it from YouTube.
The blog All Things Digital reported this week that while the labels are starting to make money from the deal with YouTube, the video site is not. YouTube has to pay the labels each time someone views a clip, regardless of whether it's generating any revenue, according to the blog.
By pulling out of the deal with YouTube, Warner loses access to the Web's No. 1 video site, which topped 100 million visitors in October. The site has increasingly become one of the Internet's favorite ad-supported jukeboxes. Of the top 10 YouTube channels, 7 are music related. Warner Bros. Records is the 11th largest channel.
"If we can't reach acceptable business terms, we must part ways with successful partners," Google said Friday on its blog. "For example, you may notice videos that contain music owned by Warner Music Group being blocked from the site.
But YouTube's growing prominence in music could change if the site were void of music.
Some of Warner's most popular artists, who will no longer be available on YouTube, include Led Zeppelin, Madonna, TI, Eric Clapton, REM, Red Hot Chili Peppers, and the Grateful Dead.
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