February 13, 2009 / 2:04 AM / 11 years ago

YouTube renews music video deal with Sony Music: sources

NEW YORK (Reuters) - YouTube, the hugely popular online video site, has renewed a global licensing deal with Sony Music Entertainment which allows it to continue showing music videos of artists like Beyonce and Avril Lavigne, people familiar with the talks said on Thursday.

Beyonce Knowles arrives at the Saks Fifth Avenue's "Unforgettable Evening" benefiting the Entertainment Industry Foundation's Women's Cancer Research Fund in Beverly Hills, California February 10, 2009. REUTERS/Danny Moloshok

The deal with Sony, the world’s second largest music company, is important in light of a decision by Warner Music Group to walk away from similar contract renewal talks with YouTube last December in a dispute over licensing fees. Warner asked YouTube to take its music videos down.

A person familiar with Sony Music’s plans said the company still sees great value in YouTube’s huge numbers of users both to Sony’s artists and to the artists’ fans.

YouTube, which is owned by search giant Google Inc, had more than 100 million users in December, according to data from comScore, a Web audience measurement service.

YouTube’s music video licenses with Vivendi’s Universal Music Group, the world’s largest music company, and privately held EMI Music are still running. But renewal talks with the two companies are coming up soon, another person close to the talks said.

Music videos, once a free promotional tool on television, have become one of the fastest growing digital revenue streams for music companies on sites like YouTube and News Corp’s MySpace.

The music labels, who signed early licensing deals with YouTube in 2006, have been keen to improve the payment rates they earn from the popular video site.

Labels earn on average around half a cent each time a user watches one of their videos on YouTube or the label can share in advertising revenue around the video.

YouTube, which is also trying to build more revenue itself and reduce its outgoing costs, is negotiating harder with the labels for better terms in its favor.

Sony Corp owns Sony Music Entertainment.

Reporting by Yinka Adegoke; Editing by Bernard Orr

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