Peter Kafka

Recent Posts by Peter Kafka

Bruce, Britney, Beyoncé Staying on YouTube: Sony Music Re-Signs

YouTube and Sony Music Entertainment have signed a deal that will keep the music label’s videos and music on the site. The contract accomplishes what YouTube and Warner Music Group have been unable to do–figure out a way to keep the label’s music on the world’s biggest video site while sharing revenue with both sides.

The deal, which extends a previous agreement, has been finalized but not formally announced, multiple sources familiar with the matter tell me. A spokesman from Google’s (GOOG) YouTube said the company would not comment on “rumor or speculation”; Sony’s (SNE) music label declined to comment. Last week, CNET reported that the two companies were “very near” to a deal.

It’s unclear what the final deal terms are, but people familiar with the matter tell me that the negotiations revolved around three components: an upfront payment from YouTube to Sony, the minimum amount Sony will receive each time someone plays a Sony video on the site, and the way the two sides will split revenue generated by any of the label’s videos.

Those terms had previously tripped up Warner Music and YouTube in December, and Warner Music (WMG) artists have been taken off the site while the two companies try to work out a new licensing deal. Sony Music’s artists range from Britney Spears and Beyoncé to Bruce Springsteen and Bob Dylan.

Music videos are some of YouTube’s most popular offerings, but they have also been expensive for the video site. Under the terms of its old deals with the labels, YouTube agreed to pay the music companies either a per-stream fee or a share of ad revenue associated with the clip, whichever is greater. Since YouTube is just beginning to get serious about selling ads next to its content, it’s usually paying the per-stream fee, which industry executives peg at about half a penny per clip.

The music labels have been angling to increase that fee to perhaps eight-tenths of a penny, while Google has been pushing in the other direction, where the two sides would simply share any revenue the clips create.

Infuriatingly, seemingly all of Sony Music’s official YouTube videos have had their embedding function turned off, which means I can’t share them with you. So here’s an unofficial but still excellent clip of The Clash, who recorded for the company’s Columbia label.


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik