Music Cartel To Challenge YouTube?

Fresh from Warner Music's bruising YouTube fight comes word that the four major music labels—Warner, Universal, Sony, and EMI—may collaborate to create their own YouTube killer. The Financial Times reports that the companies are exploring a wide variety of options to create a stand-alone online music-video platform: go it alone, partner with Hulu, or work out a special premium channel with YouTube. The Hulu option must have Google particularly worried; the Web site didn't exist at the beginning of 2008 but is predicted to draw in $70 million in ad revenue, compared with YouTube's projected $100 million.

Faced with declining CD sales, music labels have increasingly turned to online music videos as the next way to get rich, and YouTube accounts for almost all video watching on the Internet. But while Universal is reportedly content with its YouTube deal, the other three labels haven't been as happy. YouTube isn't exactly thrilled with the arrangement, either, and reportedly wants to change deals that offer labels a flat fee per video viewing, offering a bigger cut of the ad revenue instead.

But if the music labels launch a challenger to YouTube, would it really work? According to Dominic Rushe of the Sunday Times of London, almost certainly. Rushe notes what Google executives have always said: Internet dominance is notoriously fleeting, and a better competitor could always be a few clicks away. As a reporter writing a straight news piece, Rushe can't simply say it, of course. But he can quote an anonymous "media executive" in that distinctly British style of journalism: "There have been other hot brands on the Internet before. What's Napster worth now? But those names come and go. Catalogues like Led Zeppelin or Madonna are more enduring."