YouTube and Warner Music Group Corp. will announce a deal Monday that will put thousands of Warner music videos on the video sharing site and allow user created videos to legally use Warner owned music. YouTube is reported to have created technology that will automatically detect when copyrighted music is used in videos, give Warner the right to accept or reject those videos and will calculate the royalty fees Warner is owed. Financial details haven’t been disclosed yet, but may include a cut of advertising revenue in exchange for licensing rights. It's also unclear who will pay the royalty fees; that payment may come out of the advertising revenue or it may be demanded of the individual users who have put Warner music in their videos. That could get interesting.
Also interesting, as TechCrunch further notes, is the enforcement model Warner has decided to pursue:
...Warner will have effective veto power over videos using their music...In effect it’s just a technological realization of the long standing policy reality - YouTube has willingly pulled copyrighted content on request for some time. While DRM has been understood as a prerequisite for online distribution of major label content, this announcement seems to indicate a switch in responsibilities. Instead of the distributor locking down the content by default, use is open by default and can be closed at the rights holder’s discretion. It’s a very real recognition of the promotional power of copyrighted content being reused in original art. (Emphasis added.)
In other words, Warner has chosen a more direct and effective middle ground for its copyright enforcement strategy as to YouTube's users (and as YouTube, which faces potential indirect liability for its users' acts). The "locate infringement and sue" model has always been an exercise of after-the-fact discretion, but an unpredictable and costly one. Rightsholders have to pick their battles based on the potential strategic value of a victory against a particular defendant. Moreover, in every instance where rightsholders do opt for litigation, the chances of winning are never guaranteed, and the potential for doing more harm than good (through adverse judicial precedent and lost customer goodwill, for example) is very real. By striking a licensing deal with YouTube, Warner Music has figured out a way to enforce its copyrights while effectively doing an end-run around the pesky, mercurial, cumbersome, and internationally difficult and inconsistent middleman known as the judicial system. Warner still gets to choose its battles, but now it can get what it wants — e.g., use of music only in contexts it deems beneficial — without having to go to the trouble of suing YouTube users in their various jurisdictions. For Warner, it's a win-win. (Though some might argue the benefits of suing users might actually outweigh the many associated burdens.) For users, it's less so. Hopefully there will at least be guidelines for which sorts of uses will be encompassed by the license and which will not, but even if so, they will provide precious little certainty that any particular work will pass muster. And for those who find themselves on the thumbs-down side of Warner's YouTube video review process, there is not likely to be any recourse other than becoming litigants themselves, and suing Warner in an effort to determine and enforce their rights under the fair use doctrine, first amendment, etc. By going this route, Warner provides yet another example of how Code is Law — only here it's expressed in deal points and license terms rather than bits.
For further perspective, see: