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Warner unhappy with revenue lite MySpace deal
By CMU Editorial | Published on Thursday 16 April 2009
More from MySpace Music. Those wondering why Warner refused to renew its YouTube licensing deal at the end of last year, while the other three majors indicated the video service was turning into a pretty good earner for them, might find a new TechCrunch article on the major’s deal with MySpace Music interesting.
They reckon the major cut a much less favourable deal with the social networking site’s new music service than their competitors, and that they are now feeling rather pissed off by it all. Insiders say that when their current deal with MySpace comes up for renewal they’ll push for a much better arrangement, to bring them in line with what the other majors are getting, and perhaps some more to compensate for losing out to date.
Some wonder if a similar thing happened with YouTube – Warner were first to originally sign up to the video service – and that’s why they stepped up their demands when their YouTube deal came up for renewal at the end of 2008. A by that time cash strapped YouTube wouldn’t play ball, hence the pulling of Warner content. Could the same happen at MySpace when licenses are up for renegotiation?
The story also poses some questions about how well MySpace’s revamped music service is doing in the context of the advertising recession. TechCrunch reckon the other majors get a per-stream fee for their music, while Warner only get a cut of advertising revenue. The latter is not a good deal for Warner if MySpace is struggling to sell any ads. And if they are struggling to sell ads, the former is a very bad deal for them, because it might mean they are handing over huge sums to Sony, EMI and Universal, which will presumably have to be financed by Murdoch’s wallet if there’s insufficient ad revenues. So, doom and gloom all round really.
TechCrunch write: “Our sources say Warner has been complaining about the deal they did with MySpace. That deal has no per song streaming cost, but includes a revenue share on advertising displayed when the song is played. That revenue share hasn’t been what they thought it would be. And the staggering number of plays of songs from their catalogue, combined with their newly acquired knowledge that their competitors are being paid per stream, has left them steaming mad. Warner will get little sympathy from, well, anyone. But they’re telling people that they plan to make changes when their deal comes up for renewal, or pull their music from the service”.
Neither Warner nor MySpace have commented on the TechCrunch story.
