Big Music Companies in Negotiations to Form Hulu-Like Site

The Music Companies versus YouTube debacle continues to unravel one bit at at time. Now, Silicon Alley Insider is reporting that Warner, Universal, Sony and others are in talks to create their own Hulu-like site for music videos.

The music labels are "only" making a max of $25,000 per month off of ad revenues from YouTube. But that's only half the story. The real money is made from a pay-per-play licensing deal.

To be making this kind of direct money off of music videos, which have only been used as a marketing tool up to this point, is a big shift in the music industry.

Universal makes tens of millions on YouTube and they expect to make even more next year. Overall, they expect to make $100 million next year from all of their agreements with various sites.

Since Hulu keeps NBC content on just two sites - Hulu and NBC.com, why would Universal want to restrict their offering to just one site?

Pulling from the world's largest online video site means less exposure to millions of people. YouTube had 100 million unique visitors in October. Those visitors are concert-goers and merchandise-buyers.

Another factor is how YouTube is no longer just a video streaming site, but a bonafied search engine. YouTube is starting to pass Yahoo in searches conducted. On an anecdotal note, my son conducts searches via YouTube frequently. He hates reading; watching video is a much easier way for him to learn.

Bailing on YouTube would be pulling an entire, effective marketing channel. So, here's my final warning to the music companies. The numbers speak for themselves.

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