Labels, websites in video tussle

Brands such as Coogi, a clothing maker, are so eager to be associated with music videos that paid product placement underwrote the entire $1-million production cost for the Universal Motown music video of Akon's "I'm So Paid." In the opening of the video, a helicopter deposits the urban artist on the deck of a 40-foot yacht, where he disembarks and saunters past two Coogi bikini-clad women perched on the edge of a hot tub.

Paid product placements are "the smarter way to do it," said Aliaune Thiam, who performs under the stage name Akon.

The popularity of the music video as its own form of entertainment has emboldened the labels to restructure deals and demand bigger payments from their digital distributors -- setting the stage for the stand-off between YouTube and Warner Music, the third-largest label and home to such acts as Madonna, rapper T.I., Red Hot Chili Peppers and Linkin Park.

"We want to offer the most complete array of music possible, but we need to do that in a way that makes economic sense," said Chris Maxcy, YouTube's director of content partnerships. "Some labels are clinging to a model that makes no sense economically. We'll be sad to see that content go, if it gets to the point where we can't agree on terms."

The licensing issue is so sensitive that some smaller social music networks, such as iMeem and iLike, declined to discuss it for this story.

At least one of the major labels is seeking a mandatory minimum licensing fee of $20,000 a month, said Ted Cohen, an industry veteran who now heads digital consulting firm TAG Strategic. Though it's understandable that music companies are looking for alternative revenue streams, he said, such sizable payments threaten to drain budding ventures of the cash they need to remain in business.

"We need to come up with sustainable models," Cohen said. "What's happening is [that the labels are saying], 'Give us a bunch of money; we don't care if you're around in six months.' "

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dawn.chmielewski@latimes.com