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Will YouTube’s Music Deal Set Precedent?

YouTube is showing some love to songwriters and music publishers by inking a deal with a UK licensing group, agreeing to pay royalties for songs used in videos on the site. YouTube will pay a flat fee for the ability to license 10 million pieces of music.

Digital Journal — YouTube is showing some love to songwriters and music publishers for the first time ever, agreeing to pay royalties for songs used in videos on the site.

YouTube struck a deal with a British licensing group that collects payments on behalf of 50,000 composers, songwriters and publishers. The MCPS-PRS Alliance said the deal would let users of the Google site record music legally in their videos. YouTube will pay a flat fee in exchange for licensing a library of 10 million pieces of music.

The Times notes the deal should give YouTube a few brownie points:
The agreement will go some way towards reassuring content owners, who have been concerned about the amount of material that appears illegally on YouTube and which does not generate any revenue for its creators. Distributing the revenue to members will be determined by what music has been played on the video-sharing site. But finding out what songs are used where could prove difficult, and the alliance will be working with YouTube to develop the appropriate technology. Attention will be directed to clips which attract the most visitors.

Andrew Shaw, the managing director for broadcast and online at the MCPS-PRS, told the Times:
We’re more interested in videos that are played three million times rather than three times. Logic would dictate that you start with the high volume videos and work your way down to the long tail. It should be noted that the deal only applies to royalties collected from clips watched by YouTube users in the U.K.

Although this deal has been cemented overseas, the impact of the agreement is enormous. It’s well-known YouTube has already signed deals with major record labels to use their music, as long as the labels get a share of YouTube’s ad revenue. But this is the first time YouTube has signed a contract to pay royalties to a group on behalf of songwriters and publishers. Paying labels is one thing; paying musicians directly is an entirely different story.

The MCPS-PRS announcement comes on the heels of several lawsuits YouTube is facing. Earlier this month, the National Music Publishers Association (the US version of the MCPS-PRS) joined seven plaintiffs in suing YouTube for violating copyright laws. One way to get some cash for your music is suing the pants off Web properties. But another way to play hardball is by getting aggressive and diplomatic, signing deals with sites that continually use music from around the world, often illegally. YouTube isn’t going away anytime soon, and the MCPS-PRS is smart enough to realize that truth.

Chad Hurley, CEO of YouTube, said in a press release about the deal:
This agreement is another great example of how we are working with the music industry to explore new and creative ways to compensate music creators.YouTube is on the right track, and they are supposedly exploring licensing opportunities in other world regions. Savvy music publishers would remain patient instead of paranoid. Of course, they could slap YouTube with a lawsuit, but that’s not going to solve anything. As dictated by today’s news, the smartest songwriter groups will work with websites rather than against them.

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