YouTube, founded in 2005 by former PayPal employees, arrived when video streaming on the internet was splintered in many proprietary platforms depending on what site you visited. I want to stress upfront just how much in the mid-2000s the ability to watch video on the internet wasn’t new or novel, but such activities happened across various players and websites. Myspace and Google had its own video players, and so did many media companies, and while many were buggy garbage, by the mid-2000s there was clearly a growing market with the rise of broadband internet particularly in the United States. Even with all of this competition, YouTube, by early 2006, started to pull away and succeed with virals hits by OK Go (“Here It Goes Again
”) and the Saturday Night Live clip of “Lazy Sunday”, which sparked its own rather public drama between NBCUniversal and the emerging video platform.
Those early successes pushed YouTube to engage in talks with major television networks and record labels
within a year. No matter the inane press bias towards technology companies being forward thinking and old media being trapped in the past, these massive multinational companies always kept an eye on the pulse of where its audience might go. If young people are going to be consuming online video, then you best believe major networks are going to try to control this new platform. Thus, before many ground rules could be set about what a platform like YouTube could mean for an amateur creator, major entertainment companies were already setting up the new rules
YouTube’s relationship to music started immediately, as articles kept citing the fact that endless unofficially uploaded music videos dominated the platform. This back-and-forth defined the initial 18-24 months of the still-growing video company. There was concern about YouTube’s lack of business model, so any copyrighted content on the service typically wasn’t approved in those early days. But for copyright holders, the bigger issue was that they weren’t making any
money from it. The early irony of record labels is that while it’s reasonable to question the misuse of one’s work, the solution was simply to monetize, through advertising, what were originally advertisements that morphed into another method of squeezing dollars out of promotional material. An August 2006 Mashable story
highlights a contradiction that existed within the role of music videos in the 2000s music ecosystem:
There’s much buzz about YouTube
‘s announcement this week that it plans to host “every music video ever created” within 18 months. Warner Music Group and EMI are involved in the talks. The videos will be free, which makes absolute sense - why does iTunes charge you to watch promotional material?
(Again, this could be a whole other newsletter but I wanted to make a quick side note here. What is oddly overlooked in comments like the one above is that record labels effectively figured out a way to monetize music videos by the mid-2000s. Artist music video compilations existed throughout the 1990s and in the 2000s there were CD/DVD combos that jacked up the retail price for the privilege of watching music videos on demand. The record industry didn’t suddenly want a new way to make money off of videos from YouTube; no, the record labels wanted to sustain the money that was being wrung out of promotional material.)
Ultimately, YouTube did start to build up deals with different major labels. The first deal was struck with Warner Music Group in September 2006
, then Universal Music Group
and Sony Music
followed in October of that year. That same week it was reported that Google would be buying YouTube for $1.65 billion, which would ultimately net the major labels’ $50 million after the sale
, according to the New York Times
. What’s funny to me is just how high the tension between YouTube and the major labels appeared to be, even after such a deal. Earlier this year, I wrote about how the failure to constrain piracy
with early subscription models birthed the dual paths of advertising-based streaming and the still-growing iTunes music store. When describing the deal, the Times
Indeed, the companies’ deals with YouTube call for them to share revenue from ads that will run alongside their music videos. As part of the deal, YouTube will use new technology to identify copyrighted material that users have uploaded to the site without permission.
The trade-off for getting major label content on the platform wasn’t only monetary, but also effectively creating a surveillance state on the platform purely toward copyrighted material. I bring this up because while this is one of the core aspects of YouTube in the 2010s, I find it hard to imagine the company existing without this assurance towards major labels and international copyright holders. Still, such a truce between ultimately competitive companies wouldn’t last long.