The record labels like to think they built MTV — and have been punishing every new idea for promoting music since. That self-defeating dynamic could destroy a nascent YouTube partnership between Google and Universal Music.
The effort, codenamed "Vevo" according to the Wall Street Journal, would involve a new showcase for music videos on YouTube, with the notion of commanding higher advertising rates. Right now, YouTube makes pennies per view — if it's lucky. Most of YouTube's bandwidth-consuming video funhouse goes unburdened with revenue.
In December, Warner abruptly withdrew its music videos from Google. Most people assumed Warner was throwing another typical record-label fit and being unreasonable. The word from the Googleplex, though, is that the Warner deal was a victim of CFO Patrick Pichette's cost-cutting crusade. In YouTube's early days, the video site had struck a deal, then hailed as groundbreaking, to pay Warner to play copies of its music videos uploaded by users and thereby avoid a massive copyright-infringement suit. But that deal was rather richer for Warner than for YouTube. Google executive Jonathan Rosenberg explained the move on a recent conference call with analysts:
... we'd love to work with Warner. But I think we're going to continue to do what we've been doing; try to continue to make mutually beneficial deals and then try to do some of the things like we talked about on the earlier call with respect to better monetizing YouTube ...
In other words, Google just doesn't make enough off of videos to justify the rates it's been paying Warner and the other labels.
Did Warner walk, or did Google dump it? It's still not clear. What is clear: There's not enough money in online music videos to go around. Google and Universal are negotiating a deal in the hopes that there will be.
But what if there's not? In the '80s, teenagers stared slackjawed at MTV, because there simply wasn't anything else like it on the air. But now, thanks largely to YouTube, there's a surfeit of video everywhere you go. And traditional three-minute music videos, while they satisfied an '80s attention span, are too long for the YouTube generation, which likes its clips a minute or less. (A classic video like Take On Me seems epic now.) Perhaps the record labels should count themselves lucky if they get a link to iTunes, let alone a revenue share — and that anyone still wants their music videos at all.