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Music industry mining some revenue from YouTube

Youtube-money When you click play on the YouTube version of 50 Cent's "I Get Money," the rapper actually gets money.

Thanks to a revenue ad sharing model that launched on the video site a couple of years ago that has earned some cash for indie video producers, the music industry is collecting a relatively small but steady stream of revenue.

This money continues to trickle in to music companies' bank accounts from YouTube, even as record labels lobby Congress for radio to pay them airplay royalties like those that songwriters have been collecting for decades.

Currently, record companies receive royalties from songs played on satellite radio and online streaming services, such as Pandora, but not AM/FM terrestrial spins.

"It's the hottest issue right now," said Bob Frank, president of E1 Music, one of the largest independent labels (formerly named Koch Records), in a phone interview.

As for YouTube, which Frank says is "an entirely different beast," labels get paid a negotiated fee for money made through ads on videos posted to ...

... the company's YouTube channel. Labels get a much smaller amount for songs that are embedded in user-created videos.

"These are very, very small numbers," Frank said. "But when you have millions and millions of streams per month, they add up."

While YouTube's payout at this point isn't substantial enough to run a business around, its potential for the future as a cash cow and as a promotional medium is compelling.

"Nobody is getting rich, but that's not the point right now," Frank said. "We want these models to work. We want these models to grow."

The music royalty system online, like radio, music executives say, still has a long road ahead.

"Music licensing -- particularly for music publishing on the Internet -- is so complex today that pots of money are left on the table," wrote Zahavah Levine, chief counsel for YouTube, in an e-mail. "Everyone loses."

YouTube has made the process of embedding music into your videos easier with its AudioSwap tool. Users choose from a list of pre-approved songs organized by genre, and can layer one onto their videos. The songs' owners, often small digital music production companies contracted by YouTube, receive a royalty for each stream.

Neither YouTube nor labels are saying how much companies are paid for songs that appear in user-generated content, and that amount may vary from label to label -- and video to video.

Pete Waterman, who wrote the Rick Astley song "Never Gonna Give You Up," complains that after his song was streamed tens of millions of times during the heyday of the Rickrolling phenomenon, he only made about $15.

Of course, he's just one of many who might lay claim to a share of the Rickrolling pot -- from the publishing company, the record label and his two co-writers, the latter of whom also walked away with $15 each.

Waterman's royalties would have been higher if the song was lighting up the airwaves as it did the tubes because songwriters make more from radio play. But he says the Rickrolling phenomenon didn't convert to increased radio airplay.

Still, he could use that money to pick up a six-pack to celebrate the fact that he made any cash at all from a two-decade-old song that was revived as a practical joke.

I mean, how many people actually chose to get Rickrolled?

-- Mark Milian

 
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