YouTube Deal with Warner Pays Pros, not Little People

Online sensation lonelygirl15 may have scorned YouTube by moving to underdog CGM video site Revver, but can you blame her? After all, YouTube just announced a revenue-sharing relationship with Warner Music Group (WMG), even though the video site isn’t offering the Web video star, her saga’s creators or their content-producing cohorts a share in any ad wealth.

WMG will offer up its library of music videos and other programming like behind-the-scenes clips and interviews for viewing on YouTube, as well as for integration into users’ own creations. Though financial terms of the deal were not revealed, WMG will receive a portion of dollars derived from ads served in conjunction with its music videos and user-generated videos featuring its content.

“[WMG] artists will be paid based on the use of their content on YouTube,” a WMG spokesperson told ClickZ News. “They will be paid a share of the monies that we receive according to the terms of their agreements,” continued the spokesperson. WMG artists will have the ability to opt out of ad sharing and have their content removed from YouTube if they so choose. Music labels such as Atlantic, Warner Bros., Reprise, Rhino and Sire fall under the WMG umbrella.

The partnership is an extension of one the two firms made recently to feature Paris Hilton-related video content in a branded YouTube channel to promote her new Warner Bros. album. YouTube also forged a year-long alliance with NBC in June, agreeing to promote NBC shows like “The Office” and “The Tonight Show with Jay Leno” on the video site.

Youtube isn’t faring so well with Universal Music Group, who’s CEO reportedly hinted about impending legal action against the video site and MySpace. “We believe these new businesses are copyright infringers and owe us tens of millions of dollars,” several publications quoted Universal Music CEO Doug Morris as saying during an investment conference. “How we deal with these companies will be revealed shortly.”

Through its deal with WMG, YouTube can complement the uncontrolled user-generated, professionally made and other content making up the bulk of its offerings with content advertisers are more comfortable sponsoring. If the site continues on this branded content path, however, it could alienate the very users who have made it popular, suggested JupiterResearch Analyst Emily Riley. “If people come to the front page of the site and it becomes commercialized,” she said, “It’s going to be like going to the mall or grocery store rather than talking to your friends.”

A commercial video clip for ESPN’s “Monday Night Football” was prominently featured on YouTube’s homepage yesterday. Colorful comments spiked with four-letter words, and denigrating American football in favor of the footie game played worldwide, were posted to the video page.

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