Digital Music Group Strikes YouTube Revenue Share

February 12, 2007

Sacramento-based Digital Music Group, Inc. (DMGI) has finalized a content-sharing deal with YouTube, one that includes a revenue-sharing component. The deal, announced this morning, will mostly feature classic television shows like "I Spy" and "Gumby". The content will become available within the next few weeks, and advertising will accompany the episodes. For DMGI, the pact follows an acquisition and distribution philosophy that focuses on less mainstream content, and mostly involves music. It also introduces a major licensing partner into the portfolio, though DMGI also plays ball with other providers like iTunes. For YouTube, the deal could help to broaden the licensing landscape for full-length television shows, and soften resistance from major television studios.

On the music side, licensing arrangements with major labels are now entering the unknown. Earlier, the video giant finalized licensing deals with Warner Music Group, Universal Music Group, and Sony BMG, but a planned filtering and royalty distribution system has not yet been launched. That sparked a major take-down demand from Viacom, which expressed frustration over the delays. Meanwhile, EMI has remained on the sidelines, potentially anticipating a less-than-perfect outcome involving rival majors. Elsewhere, YouTube parent Google is coming under heavy pressure from major media companies for allegedly facilitating links and advertising for illegal film download destinations.