Launch.com, an on-demand music video site competing with Artistdirect.com and MTV.com, scored its third music video distribution deal as Warner Music Group agreed Wednesday to license its music video catalog.
In exchange, Warner Music Group got a stake in Launch, and will earn royalties for videos on a per-stream basis.
The agreement is a feather in Launch's cap. The site offers Net radio, live performances with popular artists, band biographies and community features. Its most popular feature is its music videos, which can be downloaded for free online viewing. Launch CEO Dave Goldberg estimates the site serves up to two million videos per month.
To build out this section, Launch has offered Sony and EMI similar equity deals in exchange to access to the major labels' catalogs. Now Warner has joined the pack.
Launch's deals with three of the five major labels aren't exclusive - Warner Music Group recently partnered with Launch's competitor Artistdirect (after taking an equity stake in the company) to license its newly released music videos. Like Launch, Artistdirect will have to pay per-stream royalties on music videos.
For Warner and the other majors, licensing music videos to entertainment sites offers them a way to make sure history doesn't repeat itself. MTV got to set the rules for video distribution on cable television, and the majors weren't happy with the outcome.
"We've started our initiative to reverse what happened in the past, where videos were aired without compensation to the labels and the artists," says Paul Vidich, executive vice president, strategic planning and business development for Warner Music Group. "We set out pretty carefully to alter this paradigm in the new world."
Vidich is careful to stress that not just the label, but the artists, would share in the royalties generated from online music videos. How much exactly?
That would depend on the artists' contracts, says Vidich.
Whether MTV's Internet properties, which include MTV.com, VH1.com, and SonicNet, will have equal success with scoring online music videos, remains to be seen. Vidich says Warner Music Group had only had preliminary talks with MTV, and added that the label would look for deals with similar cash and/or equity terms.