Report: Labels Consider Online Music Video Project

New Vid Site In The Works?

WARNER MUSIC GROUP -- now banned from YOUTUBE following failed licensing negotiations -- isn't the only major record label tired of doing business with GOOGLE's video-sharing site, reports THE SILICON ALLEY INSIDER. A source familiar with the negotiations said WARNER and the three other majors -- SONY BMG, EMI, and UNIVERSAL MUSIC GROUP -- all think they could do better creating their own music video Web destinations and are in early talks about forming a joint venture similar in concept to HULU, the increasingly popular TV-on-the-Web joint venture from NEWS CORP and NBC UNIVERSAL.

The problem with the YOUTUBE deals is that while the labels are making money allowing YOUTUBE to host videos -- a UNIVERSAL MUSIC GROUP exec recently put the annual figure in the "tens of millions" -- almost all the money comes from a pay-per-play licensing fee YOUTUBE agreed to back in 2006, right before it sold to GOOGLE.

The reason the ad revenues are so low is that it's hard for GOOGLE to sell ads against user-produced YOUTUBE videos that feature copyrighted music. Under the current deal, YOUTUBE still has to pay a royalty for these.

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