UMG, YOUTUBE WORK OUT NEW PACT

Universal Music Group and YouTube have announced a new global deal, and while quotes have been furnished from Sir Lucian Grainge and YT CEO Susan Wojcicki, no details about the agreement have been released. However, sources close to the deal say it obligates YT to police content much more aggressively and to keep certain content designated by rights holders behind a paywall as it builds up its paid service; the pact is also said to have changed the contours of the ad-supported tier to expand the pool of potential advertiser revenue.

Sony Music hasn’t acknowledged making a similar deal, despite reports that it has; a Sony rep declined to comment. WMG inked a new licensing deal in May.

Many biz watchers have expressed skepticism about YouTube’s ability to gain traction with a paid service after building its business on giving away everything for free. But the digital landscape has changed mightily of late, with the center of gravity moving to streaming services like market leader Spotify and the growing Apple Music (with Amazon and others now making strides). That competition, some believe, incentivizes YouTube to compete more aggressively in the space.

Several rights holders are said to have weighed pulling their content from YouTube entirely; the agreement touted today is thought to be a pragmatic, near-term solution that applies pressure strategically in the direction of good content policing and growth in both ad- and subscriber-driven revenue.

Interestingly, the deal was negotiated with YouTube’s top leadership; despite reports elsewhere, Head of Music and industry laughingstock Lyor Cohen is believed to have been kept out of the process entirely.

Oh, here are the quotes.

“This important step forward provides our recording artists and songwriters improved content flexibility and growing compensation from YouTube’s ad-supported and paid-subscription tiers," Grainge declared, "while also furthering YouTube’s commitment to manage music rights on its platform."

Said Wojcicki: “This agreement means we can drive more value to the industry, break and support more artists and deliver an incredible music experience to fans around the world.”