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Warner Music, Labels Eye Video Download Site

29 Dec, 2008 By: Erik Gruenwedel

Warner Music Group is reportedly considering creating a video download site independently or with other record labels after it failed last week to reach a new content licensing deal with YouTube, which is owned by Google.

YouTube pays Warner and other labels, including EMI, Sony Music and Universal Music, a set fee each time their music videos are viewed on the social networking site, according to the Financial Times. Google is looking to reduce the fee or substitute it with ad-revenue generated by the videos. The labels, in turn, want to raise the fees.

Universal Music reportedly earns “tens of millions of dollars” a year in fees from YouTube.

The unnamed venture would establish a site similar to Hulu.com, which NBC Universal and News Corp. bowed last year to repurpose TV and filmed entertainment online. Several of the labels are also in discussions with Hulu to distribute music videos.

Hulu and YouTube generated about $70 million and $100 million, respectively, in 2008 ad-revenue in the United States, according to Screen Digest.

Record labels are increasingly leaning toward digital distribution as a means of returning to profitability after years of steadily declining music CD sales.

Warner said it generated $638 million in digital revenues this year, up 39% from last year. EMI and Universal reported digital revenue increases of 29% and 31%, respectively.

The Recording Industry Association of America (RIAA) earlier this month abandoned its years-long practice of suing individuals who illegally download and share music on peer-to-peer networks.

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