CNN reported last night that YouTube and Warner Music are breaking up their partnership. Warner was the first of the major music labels to sign up with YouTube and allow its music videos to be shown. Warner's top star is Madonna.
The deal between YouTube and Warner was done before YouTube was bought out by Google, and based on a revenue-sharing deal on the ads that YouTube shows. Now Warner is disappointed in the revenues generated at YouTube were "staggeringly low" and not in line with what Warner earns at AOL and MySpace. CNN reported that YouTube has 100 million viewers per month in the USA alone, yet earns only about 200 million in ad revenues for the whole year.
Note that if we assign all the ad revenue to the US viewers (and kind of ignore the international viewing audience), then the total YouTube earns is about 2 dollars per viewer per year, or 17 cents per month. If that is divided with dozens of major media brands like the big music labels like Warner, EMI etc; and of course other major media brands like the broadcasters like CBS, NBC etc; and the miscellaneous cable channels like HBO, CNN etc - there really is not much to offer in the revenue-share with a given media company.
Meanwhile other services have been set up around groupings of content and media brands like Hulu with Universal, Viacom ie Comedy Central, MTV etc, and NBC among their stable of media brands.
What does it mean, then? Well, first, obviously, any announced partnerships for the new media space, are not necessarily written in stone.
Secondly, the current severe economic downturn is testing the will of any such partnerships. Not every "marriage" in this space is meant to last. It is not a bad thing to notice if a given merger or partnership was not really solid and should not be pursued. Third, there is an ever increasing contest for those "eye-balls" and the advertising dollar. Just being on "the net" is not enough, there needs to be valid reasons to do so.
You're wasting you breath.
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