THE LATEST AND MOST VIVID SIGN of change in the music industry is the deal that Warner Music Group announced Monday with YouTube, an online video site whose skyrocketing popularity stems in part from bootlegged music videos.
The agreement starts with a seemingly conventional licensing deal for Warner music videos, interview clips and behind-the-scenes footage. Then it goes two steps further: In exchange for a cut of YouTube's advertising revenue, it allows YouTube users to post footage that's copyrighted by Warner, as well as original videos using Warner's music. The latter would include the inexplicably popular category of lip-syncing videos, such as the second-most-viewed YouTube clip of all time: two guys performing to the "Pokemon" theme song.
Although Warner retained the right to block videos it considers inappropriate, it still showed more willingness than other major labels to relinquish control over the distribution and creative use of its products. That shift of control is an essential quality of the digital era, yet entertainment companies in general have struggled to accept it, let alone harness it.
For them, the problem is part economic and part legal. Many online firms, including YouTube, don't charge users for the entertainment they consume. And the labels' artist contracts and copyright law allow for little flexibility.