Universal Music & Google Want You to Watch Their Special New Music Channel (Don’t call it YouTube!)

By Mike McGuire | April 10, 2009 | 0 Comments

It’s special in the sense of “separate” or apart from the crowd, so to speak. The crowd in question being all the regular old channels on YouTube which contain music videos. Essentially, this story describes a meeting of minds (Doug Morris and Eric Schmidt) and motivation (online revenue) between Universal Music and Google’s YouTube video portal.

Sigh. This old story line again. This would appear to be the latest version of a music label trying to brand a piece of online property and claim it as theirs. Or rather, find an aggregated audience online and try to co-opt to a site of their own. A few years ago, one would wander the halls at music conferences and hear a discussion or a rumor about the labels considering the idea of building destination site. The operating notion in that construct being that the label or labels could get online fans to come directly to sites they control.

So while Universal’s channel on YouTube is quite popular, Universal executives, at least the CEO Doug Morris who is quoted in the Billboard story, wants to set up a separate channel. Morris’ statements in the article indicate that the belief is higher value advertising inventory would be created because the site would be tightly controlled. (To be completely clear, many important details about have not been released and nor has any real date for the service’s debut.)

So why create a separate channel – and Morris is apparently responsible for getting the other three labels to eventually sign on – for the labels? Money, obviously.  But why push a new channel when Universal, at least, is getting money from the existing online video channels?

Here’s a possible reason: one of the signature strategic reaction of the Internet-traumatized music labels is the 360-degree-deal. In these deals, a band agrees to cut the label in on a almost all revenue streams a band or artist generates. In the past, revenues from things like tours or merchandise generally were kept by the band or artist. It is natural to think that the label, having started these 360-degree deals would be on the hook to show that their ability to discover, groom and promote artists – because that’s pretty much all they have left as value-adds – is so strong that it would be worth it to the band or artist

What would the label have to show to convince any farsighted musician or artist manager to continue such an arrangement, let alone sign one in the first place?

I would think they would have to show the ability to aggregate large monetize-able audiences on the label’s property or a property over which the label has a significant amount of control. Think about it. Because if it’s YouTube, or iTunes, or somebody’s MySpace page, aside from making content or information available, the label has very little to do with driving an audience.  Why would a band or artist hand over what is potentially a significant amount of revenue, and control, to an entity which can exert very little control, hence have almost no ability to deliver any measurable performance or value?

Thus, we have Universal Music and Google’s special music video channel.

That’s my theory.

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