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Warner Music Extends Deal With YouTube After ‘Months of Tough Negotiations’

Variety logo Variety 5/5/2017 Jem Aswad
© Provided by Variety

Warner Music Group has extended its recorded-music and publishing deals with YouTube — reluctantly, according to an internal company document obtained by Variety.

The memo, which is addressed to unnamed staff members from CEO Steve Cooper, reads in part, “I wanted to let you all know that, following months of tough negotiations, we’ve extended our deals with YouTube, separately for music publishing and recorded music. On the publishing side, Warner/Chappell tirelessly championed songwriters’ rights, and equally, our recorded music team was relentless on behalf of our artists and our music. 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,” the memo continues. 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.”

Warner’s next earnings report is scheduled for Monday morning.

Music companies have long railed against safe harbor laws and YouTube’s comparatively low royalty payments. In an IFPI report released last month, YouTube and other user-upload video streaming services were singled out as a major deterrent to the music industry’s recent growth. Based on the IFPI’s “conservative estimate,” some 900 million people use such services and pay around $553 million to rights holders in revenue. By contrast, the much smaller base of 212 million users of licensed audio subscription services (both paid and ad-supported) such as Spotify and Apple Music paid more than $3.9 million.

In September 2006, Warner became the first major music company to sign a licensing deal with YouTube. (Warner’s chief executive at the time, Lyor Cohen, was named YouTube’s global head of music in September 2016.) Despite that, the company’s relationship with the platform has been contentious, with Warner going so far as to pull its content from the site in 2008, only to return it nine months later, under scarely improved terms, because it was losing so much revenue due to unlicensed content on YouTube.

Universal and Sony are expected to negotiate their next deal with YouTube as part of Vevo, the video-hosting platform the two companies launched in December 2009.

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