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Three of the four major music companies — Vivendi’s Universal Music Group, Sony and Bertelsmann’s jointly owned Sony BMG Music Entertainment, and the Warner Music Group — each quietly negotiated to take small stakes in YouTube as part of video and music-licensing deals they struck shortly before the sale, people involved in the talks said yesterday. The music companies collectively stand to receive as much as $50 million from these arrangements, these people said.
Full Article [nytimes.com]
It seems a little shady to me given that it's only the big labels that got a slice of the action. I guess the others can be paid off easily, but I'm not sure how I feel about that.
However if this proves to be a litigation-busting move then it will certainly shut up the critics.
Record companies have benefited from investments in online companies before. In 1999, EMI made $40 million literally overnight by selling part of its stake in Musicmaker.com during its first trading day. That sum dwarfed the company’s earnings from American CD sales for the entire first half of that year.
At first I though 25 million was peanuts as well. But if $40 million "dwarfs" earnings from American CD sales then maybe $25 million is a fair shake?
Also the article mentions revunue sharing from ads.
Where the hell does all the money go to for a $17 CD?