Monday, September 18, 2006

Major labels might slow down YouTube

A deal in between YouTube and Warner Music Group Corp. might be seen as the beginning of the end of the YouTube era, remember Napster, or at least enforce a significant change or cause major slow down in the video site’s rapid growth. The deal says that the label will put thousands of Warner music videos on the video sharing site and allow user created videos to legally use Warner owned music.

The question here is who is going to pay the royalties, the users who use Warner copyrighted content or YouTube itself? If it is going to be the users who use the Warner’s copyrighted music in generating their own that might really get the site’s usage slowed significantly down. Further more, other major labels such as Universal could do the same in near future putting additional pressure over the YouTube’s business model. If YouTube decided to cover these fees on its own, it could result in much less revenue for the rapidly growing video sharing site in a moment where the company pays millions in monthly bandwidth charges.

In a different angle, this might be considered as a positive step taken by the YouTube in an effort to solve the legal dilemma of copyrighted content, which is known to be the primary barrier to YouTube’s possible acquisition.

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