Warner to license music in YouTube videos

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YouTube and Warner Music Group Corp. will announce a deal Monday that will put thousands of Warner music videos on the video sharing site and allow user created videos to legally use Warner owned music. YouTube is reported to have created technology that will automatically detect when copyrighted music is used in videos, give Warner the right to accept or reject those videos and will calculate the royalty fees Warner is owed. Financial details haven’t been disclosed yet, but may include a cut of advertising revenue in exchange for licensing rights. It’s also unclear who will pay the royalty fees; that payment may come out of the advertising revenue or it may be demanded of the individual users who have put Warner music in their videos. That could get interesting. Warner’s last experiment on YouTube, the Paris Hilton channel – was widely seen as a failure.

Update: YouTube has made an official post about the deal and has said that use of the copyrighted music from Warner will be free to users.

This is big news, as the legal dilemma of copyrighted content has been the primary barrier to YouTube’s possible acquisition and has presumably cost the company in possible advertising revenues. If a similar deal can be made with other record labels, the landscape of user generated content could be changed radically. The Warner deal stands in major opposition with the position of Universal, whose CEO Doug Morris said last week that YouTube and MySpace owed the label millions. Morris indicated that a legal challenge might be forthcoming.

While it’s very exciting that a new model is being created, the caveat that Warner will have effective veto power over videos using their music is particularly interesting. In effect it’s just a technological realization of the long standing policy reality – YouTube has willingly pulled copyrighted content on request for some time. While DRM has been understood as a prerequisite for online distribution of major label content, this announcement seems to indicate a switch in responsibilities. Instead of the distributor locking down the content by default, use is open by default and can be closed at the rights holder’s discretion. It’s a very real recognition of the promotional power of copyrighted content being reused in original art. I think it’s great news.

We first covered technology capable of detecting copyrighted content in the case of video distributer Guba, who has developed a system code named “Johnny” that detects copyrighted video. We also wrote about online social network Faces (disclosure: now a sponsor) that counts all music played against an internet radio license. I hope that tomorrow’s Warner/YouTube announcement is a sign of times to come; when technology like this is used to protect rights holders’ baseline interests but in the context of widespread free use.

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