Universal Music to start receiving royalties from YouTube covers

Remember a few years ago when record labels tried to shut down every music video they could on YouTube? There was of course obvious sense in that (from their POV), however the consumer persisted and eventually labels realised the might of the visual web to appeal to a new untapped fanbase.

Move forward to 2013 and Universal Music seems to be the first major label out there to start embracing the ‘next wave’ of YouTube music. According to the Wall Street Journal:

Universal Music Publishing Group has struck deals with Maker Studios Inc. and Fullscreen Inc., two of the biggest “multichannel networks”—a new breed of digital entertainment companies that distribute, promote and sometimes produce videos specifically made for Google Inc.’s YouTube. Under terms of the deals, Universal will get an undisclosed percentage of revenue from ads that run alongside cover videos of the publisher’s songs on YouTube.

This is a smart move in my eyes:
1) Everyone loves a good cover video. The best cover videos are often virally/socially shared to millions with zero media costs behind it.
2) Cover videos probably sit there within the Top 5 ‘categories’ in YouTube (my opinion only) in terms of scale.
3) The internet is massive…. and trackable.

Confused about that last point? Well, no doubt part of Universal’s deal would mean they would have access to reports on the most popular videos the revenue-shared ads have appeared by. If they haven’t agreed this already, then they should! With this data, which is effectively ‘real-time’, their A&R teams could pounce on the most engaging artists out there and quickly snap them up before other labels get a chance. You may not be fans of Justin Bieber, but thanks to a quick-thinking marketing chap who spotted his videos on YouTube, it wasn’t long before he was signed to Island – no-one needs to tell you the rest.

Think about it; remember that high-school kid Greyson Chance whose cover of Lady Gaga’s ‘Paparazzi’ went global in days? (video below)

Within 5 weeks of this going viral, Chance was announced as the first signing for Ellen Degeneres’ own label.

There’s millions of covers out there. This is a smart move by Universal and I’ll be surprised if other labels don’t [quickly] follow suit.