YouTube and Google seek to monetize music

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Kiko Flatlines

Music was the impetus for the MySpace explosion and now YouTube and Google are both getting ready to leverage music as well. YouTube says it’s aiming to put every music video ever made on its site, a move that would take it further from both its genesis as a site for home made clips and a magnet for copyrighted works. EMI and Warner have confirmed that they are discussing the prospect with YouTube, acording to Gigaom.

Presumably a stockpile of legal content would raise the price YouTube could command for advertisements on the site, but licensing the content could be an expensive gamble for a company already spending an estimated $1 million each month on bandwidth. The company says it wants to provide every music video ever made within one to two years. That could be very expensive.

YouTube has raised at least $11.5 million from Sequoia Capital. CEO Chad Hurley said yesterday that the site is already making “significant revenue,” and is more interested in brand driven advertising and mobile extensions than in search driven ads or combining ads and video clips.

I question whether music videos will have the driving power that viral video has for YouTube; staged, familiar footage seems likely to be watched once and unlikely to be passed on to others.

Meanwhile Google unveiled today their own music play, focused on analytics. Google Labs has launched Google Music Trends, a section of Google Trends tracking music listened to by users of Google Talk in iTunes, Winamp, Windows Media Player or Yahoo Music Engine. It’s an opt-in system that tracks both individually and in aggregate. The listings and search results are all accompanied by opportunities to purchase music. Google Trends was launched in May, along with the other projects like the Google Notebook and Google Co-op.

Recommendations seem likely in the future and I wouldn’t be surprised to see Google take Music Trends beyond Google Talk and challenge the business models of companies like Pandora, Last.fm, MyStrands and others. Just today we saw another calender company drop out of the running, with the entry of Google Calendar widely cited as a factor. Users cannot currently listen to music directly through Google Music Trends.

To me the Google Labs experiment seems smart, while the YouTube music video strategy seems risky. It’s also not a sealed deal, or series of deals, by any means.

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