YouTube, the hugely popular online video-sharing service, has entered into a trading deal with Warner Music Group that will see the two businesses splitting revenue generated from advertising that accompanies music videos.
Warner Music has agreed to allow YouTube to air clips featuring its extensive catalogue of artists, including star acts such as the Red Hot Chili Peppers and Madonna, as the web site continues its efforts to secure mainstream content that will significantly increase its revenue stream. YouTube users will also be allowed to incorporate the music into their own amateur films.
YouTube CEO Chad Hurley said: "Partnering with Warner Music Group is one of the most significant milestones for our company and our community, and shifts the paradigm in this new media movement".
Hurley's counterpart at Warner Music, Edgar Bronfman, added: "Technology is changing entertainment, and we are embracing that innovation. Consumer-empowering destinations like YouTube have created a two-way dialogue that will transform entertainment and media for ever".
The deal between the two companies is scheduled to come in to effect at the end of the year, by which time YouTube plans to have finished work on an automated system able to recognise if users have uploaded copyrighted material. A portion of revenues from ads accompanying licensed music or video will then be passed on to the copyright owner, or the clip will be removed from the site.
Last month, YouTube, which served more than 100m views each day, announced a plan to host "every music video ever created" and entered into talks with several major record companies.
And earlier this week, the web site faced new competition from Microsoft, which launched Soapbox, its own user-generated video offering. Currently accessible on an invitation-only basis, the new service on MSN Video will match YouTube's functionality, allowing users to upload videos, rate them, and link clips to their personal sites and blogs.
Lovelace Consulting | 21.09.2006