In lieu of their exit from YouTube, Warner Music and other major labels are looking for another option, and have looked to the NBC/Fox joint venture Hulu for inspiration. Sources indicate that Warner is in talks with other major record labels – Sony BMG, EMI and Universal – to launch their own online music video site.
With YouTube, music companies were limited in how much they could make from music videos via advertising; the user-generated content on YouTube kept big-money brand advertisers away. Estimates put the amount of money per month that Warner was realizing from the YouTube deal at about $25,000. As deals with sites like YouTube begin to expire, the music labels are looking for options that keep their value a little closer to home.
In my opinion, this is something the music companies should have done a long time ago. Ignoring the online opportunity, the obvious customer demand for pay-per-download music, and ceding the market to YouTube and iTunes have been drastic mistakes on the part of the music companies. Refusing to compete in new markets is never a good idea. Fortunately for the music companies, unlike the auto companies in Detroit, their product is still in demand; there is still a chance to make good. YouTube, however, is integrated very tightly with mobile platforms such as the iPhone; much of the content that is being removed from YouTube would be inaccessible from a mobile device without paying for it via services like iTunes.