Feature: Why YouTube's best deal will be its death
Takeaway: YouTube's new deal with Warner Music looks like the dot-com's salvation, but it could be its downfall.
Today, YouTube announces that Warner Music will publish music videos (and some other video) through the popular video site, with both companies profiting from ads. Also, YouTube says it invented a copyrighted-material-finding machine (?) that will scour through the site's many amateur vids and give Warner Music the option to nix them or license the music.
What does this mean for YouTube? Well, the ad revenue is just what it needs, and it's a lot better than the Paris Hilton video deal. But no one cares about that right now. It's all about this magical copyright finder.
While the casual reader (say Marshall Kirkpatrick, Web 2.0 consultant turned blogger) may think this is a good sign, the more experienced Mark Cuban says this is doom for YouTube. Cuban compares YouTube's current situation to Napster in 1999 pretending its business was legal. (At that time, Cuban was pretending that his startup Broadcast.com was worth the over $5 billion Yahoo paid for it. The dude knows his dot-com booms.) Cuban says users will give YouTube the finger once it starts cracking down on their casual soundtracking. (How many YouTube videos are just a kid dancing to a song?)
Dead 2.0, an anonyblogger who may or may not know what the hell he's talking about, adds that this deal doesn't mean Warner Brothers will pump movies through YouTube any time soon. "If you haven't actually worked with content companies before," he says, "you are generally less aware of the fact that the various departments almost never interact with each other, and consent from the group doing videos does not imply any bigger deals." Plus, Time Warner sold Warner Music two years ago.
In short, this deal is part of YouTube's shift from "we love our users" to "oh shit we need to profit." It's an archetypal path for startups — Napster had to escape the lawyers, the New York Times needs that subscription charge, and Yahoo needed that China market share more than it needed to protect some political dissidents. The rare company that stays in love with its users — Craigslist, for example — does so by sacrificing millions of ad and fee dollars.
