Warner Music Group has become the first of the major music groups to sign a new deal with YouTube. But just hours after the signing, WMG chief Steve Cooper sent a now leaked memo to his staff admitting that the deal was made under "very difficult" conditions.
While the terms of WMG's YouTube deal were not disclosed, a leaked memo says it's the best deal can get because of the protections that the video sharing site receives under the Digital Millennium Copyright Act (DMCA).
“We secured the best possible deals under very difficult circumstances,” Cooper wrote in a memo to his staff. "Our fight... continues to be hindered by the leverage that ‘safe harbor’ laws provide YouTube and other user-uploaded services,” Cooper wrote. “There’s no getting around the fact that, even if YouTube doesn’t have licenses, our music will still be available but not monetized at all. Under those circumstances, there can be no free-market ‘willing buyer, willing seller’ negotiation.”
WMG won some concessions including better ad monetization, according to several sources, along with better rates from YouTube Red, Google's paid music and video subscription service.
Why A Deal Now?
Two factors may have driven WMG to become the first of the three major music groups to cut a new deal with YouTube. Ross' predecessor, Lyor Cohen, who still has many supporters within the company, was recently named YouTube's Global Head Of Music; and WMG reports its financials to investors and debtholders on Monday morning May 8th.
Irving Azoff Is Skeptical
Whatever pressures drove the undisclosed deal, some in the industry are already critical of it.
“It will indeed be a good day for artists if Warner listened to the creative community and obtained the technical improvements that allow artists to choose when and how to put their music on YouTube, and for artists to receive a marketplace rate that is comparable to the rates paid by platforms like Apple and Spotify,"Irving Azoff told Billboard. "If there was no progress made on either control nor compensation, then it is a step backwards."