YouTube has signed a major music licensing deal with a group of music publishers, the National Music Publishers Association (NMPA), that filed a class-action against the video-sharing website in 2007.  Indeed, the deal, which requires YouTube to pay licensing fees, allows the company to monetize user-generated videos that include music written by NMPA-represented artists.  The agreement, however, does not deal with four major music publishers, which each have their own licensing agreements with YouTube – EMI Music Group, Universal Music Group, Warner Music Group, and Sony Music Entertainment.

Pursuant to the agreement with NMPA, YouTube will share advertising revenue linked to videos that play licensed music.  The contract includes videos that feature covers of licensed songs.  In exchange for these payments, NMPA has agreed to drop its class-action lawsuit, which alleged that YouTube enabled the infringement of songwriters’ rights.  However, the terms of the royalty payments themselves remain confidential.

An interesting aspect of the deal is that members of NMPA are allowed to opt out of the YouTube licensing agreement or to individually pursue legal action against the video-sharing platform.  However, any such members must do so by mid-September.  The fourth-largest publisher in the world, BMG Chrysalis, is one of the members of the NMPA that has yet to join the YouTube licensing agreement.  BMG Chrysalis’s catalog includes songs by Michael Jackson, David Bowie, and Blondie.  If BMG Chrysalis chooses to reject the licensing agreement, it is unclear whether it would choose to pursue legal action against YouTube or enter into negotiations for an alternative licensing agreement.

Now that one of YouTube’s major licensing headaches is resolved, it has re-launched its music page.  The new music page, which went live on August 18th, contains a variety of new features and a new layout.  Most prominent of the new features are: the “YouTube Top 100″ list of most-played songs; recommended artists and videos; a list of upcoming local concerts; and genre guides compiled by popular musicians.

The new licensing deal has thus effectively marked YouTube’s foray into the online music platform business.  Indeed, it will be interesting to see how profitable this revamped music website proves to be for both YouTube and NMPA members and the extent to which the new licensing deal limits YouTube’s liability in the future.

Christina Santana

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One Response to YouTube Enters into a Music Licensing Deal, Revamps Music Website

  1. spals says:

    I wonder if the agreements with the ISPs over the summer helped the companies reach a consensus on terms.