YouTube strikes music video deal

YouTube said yesterday that music videos from Warner Music Group will return to the video site after a nine-month dispute over splitting ad revenue.

Most of the catalogue of videos from artists such as Madonna, Metallica and Green Day will be available for free by the end of the year.

YouTube typically gives content owners most of the revenue in ad-sharing deals. Under the new arrangement, Warner will get an even larger share than before because it is also bearing the burden of selling ads, which Warner will contract to an outside agency.

YouTube gains by ensuring that viewers wanting Warner music will have a reason to visit the site.

The deal also means YouTube has partnerships with all four major recording labels - Warner, Vivendi's Universal Music Group, Sony and EMI Group - and their respective publishing divisions.

Warner had pulled its music from YouTube in December, saying the payments it received did not fairly compensate the company or its artists and songwriters.

YouTube's head of music partnerships, Chris Maxcy, said the multiyear deal was separate from the online music venture Vevo, which YouTube and Universal are starting this year.

New York-based Warner said YouTube users would be able to access videos and "other music-related content" from its artists, but also have access to a "feature-rich, high-quality premium player and enhanced channels."

Music videos on the player will be of higher quality than previous Warner videos, and likely will be viewable on YouTube's high-definition setting. YouTube is owned by California-based Google.

Artists will have individual channels that will allow for greater fan interaction and give advertisers a more defined demographic for marketers to target.

The deal also covers advertising that could be attached to user-generated videos that feature songs or videos from Warner artists.

Goldman Sachs analyst Ingrid Chung said the deal was a positive for Warner Music Group.

She said it could drive more traffic to its artist sites and help sales of song downloads and merchandise, but kept her "neutral" rating on the shares, saying the immediate impact would be "immaterial."