First, Radio’s Compulsory License; Now It’s After MTV

Another effort to reshape the economics of the recording business by monetizing another form of music promotion: Universal’s Second Chance to Make Video Pay

The Universal Music Group of Vivendi Universal says it will no longer provide music videos free, or at a nominal cost, to Internet and cable television services that are building a potentially giant business by playing videos on demand. Universal does not want to repeat what it considers the music industry’s ill-fated decision in the 1980’s to provide free videos to MTV.

The move may test the record company’s mettle against media giants like Yahoo Inc. and Time Warner.

[…] “Too many businesses have been built on the back of the content we produce,” said Universal’s chairman, Doug Morris. “So in the future, content we produce won’t just be provided for free for promotional purposes. People will have to pay if they’re going to use it.”

[…] Universal’s new move is the second time in 16 months that Mr. Morris has shaken up the sluggish recording industry by upsetting established practices. In 2003, Universal said it would slash its suggested retail prices by almost one-third in a bid to breathe new life into CD sales. The price cut drew catcalls from many small retailers that felt their margins being squeezed, but company executives said the pricing plan had been a success, noting that Universal’s album sales jumped about 7 percent last year, beating the industry’s overall increase of about 1.6 percent.

Mr. Morris’s action also adds a major record corporation to the swelling ranks of television networks and film studios that are squaring off against Comcast and other new purveyors of on-demand services over financial terms.

As for the licensing income the record labels do receive from MTV, it is generally not shared with the labels’ artists. But Universal said it planned to pay a share of the fees it gets from on-demand services to artists and to music publishers.

Also CNet News’ Price tag added to online music videos