Ever wonder why all those music industry deals got done the very day YouTube got bought? The reason is that those companies all got in exchange a stake in YouTube in return for making the deal. That means the recording companies were only willing to deal because (a) they knew the deal was going to happen (b) they made an immediate bit of money in Google stock and (c) they were picking the winner, making their lives a lot easier.
Since the deal went down, those same companies are making it clear that they want to shut down all of YouTube’s competitors. They’ve been suing almost all the major video sharing sites; I say almost because the only guys immune are either named Google, or were bought by them last Monday. The RIAA has decided that they are willing to deal with one company, and everyone else needs to get the hell out their way.
The New York Times reports that the companies, including the Vivendi unit Universal Music Group, Warner Music Group and Sony BMG Music Entertainment, a joint venture of Sony and Bertelsmann, could see $50 million between them due to the sale to Google.
The paper reports each quietly negotiated to take small stakes in YouTube as part of video- and music-licensing deals they struck shortly before the sale earlier this month. The companies involved would not comment to the paper on their stakes in YouTube.
Just this week, Universal filed suits against Bolt and Grouper, two smaller video-sharing sites, for allowing users to post hundreds of pirated music videos of its artists, including Mariah Carey, 50 Cent and the Black Eyed Peas.
Indeed, the companies’ deals with YouTube call for them to share revenue from ads that will run alongside their music videos. As part of the deal, YouTube will use new technology to identify copyrighted material that users have uploaded to the site without permission.
It was Mr. Bronfman, now chief executive of Warner Music, who struck the first deal with YouTube. Universal and Sony BMG followed suit.
Details of the stakes that the music companies received as part of those revenue-sharing and content-licensing deals could not be learned last night. Of the four major record companies, only EMI did not strike a deal with YouTube.
Spokesmen for YouTube, Google, Universal, Sony BMG and Warner all declined to comment. EMI did not return a telephone message left late last night.
Other old-line media companies, including CBS and NBC, which also negotiated content licensing deals with YouTube before its sale to Google, did not receive stakes in YouTube, these people said.
The deal with the music companies could result in other content companies seeing similar arrangements as a requirement before agreeing to similar pacts with YouTube.
YouTube’s deals with Universal and Sony BMG came hours before it announced its deal with Google.
Indeed, people involved in the discussions said that the music companies rushed to complete the deal ahead of the YouTube deal, in part so that it could benefit in the jump in YouTube’s value.
This never fails to get more and more interesting. This YouTube thing is going to get an entire chapter in The History of Google someday.
(via Tom Taulli)