After contract renewal talks between Warner Music and YouTube collapsed, Warner decided to pull all of its music from the video-sharing site. Warner said the company's just trying to make sure its musicians are fairly compensated.
"We are working actively to find a resolution with YouTube that would enable the return of our artists' content to the site," Warner said in a statement. "Until then, we simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide."
On one hand, it's no surprise that Warner would like more Web revenue. Who wouldn't? But canceling a fee-generating contract doesn't seem like the most logical way to bring in more revenue. On the contrary, it will bring in less, at least in the short-term, as Warner will lose whatever it was garnering from the YouTube deal. What's more, Warner's lawyers will now spend time and money seeking out clips on YouTube and sending the site takedown notices.
Perhaps the gambit will pay off if users who can no longer find tracks on YouTube decide to search them out at other sites like MTV.com or MySpace, which presumably pay Warner more. But those users could instead decide to remain on YouTube and view clips by non-Warner artists.
It's not just YouTube that's facing discontent by record labels. Late last week, three labels -- Warner, Universal and EMI -- succeeded in persuading MySpace to disable the Project Playlist widget, which let users search for music online and create digital mixtapes.
Those labels also have a lawsuit pending against Project Playlist. Yet, at the same time, some major record labels themselves have cut deals with other music sites, including Imeem and Last.fm.
While the record companies appear to recognize that digital music isn't going away, they seem to want to pick and choose which sites they will allow music fans to use to organize and/or find tracks -- both ones they've purchased and ones they've come upon through other means.
That's a bizarre decision in this iPod era, when many people already have digital music and their own portable playlists. The record companies might drive people away from Project Playlist, and might even drive some people away from YouTube, but shutting out particular sites isn't going to bring in any additional revenue.