Music labels making millions from YouTube, says Google

Universal Music will be confident about the success of Jessie J's debut album Who You Are which is released today, as she is one of the most viewed artists on YouTube this year with almost 40 million hits on just two of her music videos.

Yet YouTube is no longer just about building a buzz on emerging artists and new albums. The largest labels, including Jessie J's Universal Music Group, are making "millions of dollars a month" from the advertising alongside their videos, a senior executive at the site has revealed. He added that his company's relations had improved with the labels, after the two sides fell out over royalties in 2009.

YouTube has revealed that its music partners, which range from Sony, Warner, Universal and EMI to independents and individual artists, have doubled and in some cases trebled their monthly revenues over this time last year.

Patrick Walker, senior director of content partnerships for YouTube in Europe, Middle East and Africa, said that after a slow start, the labels saw the site as an important revenue stream. "A few years ago the cheques were pretty small," he said. "We laugh about that now." There are currently 3 billion "monetised" video hits a week, 50 per cent higher than in May.

Yet two years ago, YouTube fell out with the music industry after Warner tried to force Google, which owns the video site, to pay more per hit, culminating in the label's videos being removed from the site.

In the UK, it also came into dispute with the royalties collection service PRS, prompting a removal of videos in the country. The two sides reached an agreement in September 2009, which saw thousands of music videos return to the site.

"The music industry is getting it. For the most part they are collaborative," Walker said. "People are looking at how to boost revenues more aggressively. The need to go to illegal services is declining with sites like ours and Spotify."

YouTube believes this is only the start and expects to expand through more industry partnerships, new countries and a general rise in traffic. Walker added that new devices including tablets and the rise of video views on smartphones, would boost revenues.

Warner had been the first to sign a deal with YouTube, in 2006, before the other majors signed up. The group has since forged ties with a number of independent labels such as Domino Records. There are now 2 billion views on YouTube a day, up 50 per cent from 2009, with 35 hours worth of video uploaded every minute.

Lady Gaga became the first-ever artist to reach 1 billion views on YouTube in October last year. She has since been joined in the "billionaire's club" by Shakira and Eminem. Justin Bieber, who has also hit 1 billion views, first found fame through the site.

- THE INDEPENDENT