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Music biz hopes to profit from consumer content

January 3, 2007

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If 2006 was the year of user-generated content, 2007 will be the year the music industry learns to generate new revenue from the hugely popular trend.

The Washington Post reports that labels are striking licensing deals with sites like YouTube so that fans can post copyrighted content or include it in videos they make themselves. Additionally, labels are expected to start releasing new types of content – such as unused clips or video montages – specifically created for fans to manipulate in new ways.

By doing so, record labels can then share in the advertising revenue these sites collect. Rather than just suing YouTube and its ilk for how their sites are used, the music industry can now profit from them, not to mention reap the promotional benefits.

“They’re doing it anyway,” says Ted Cohen, former EMI Music Group digital executive and now founding partner of consulting firm TAG Strategic. “There’s a chance to monetize this behavior.”

Additionally, music companies have the chance to let their fans actually sell music to one another via playlist-sharing services and peer-recommendation sites. Word-of-mouth marketing is exploding online through user-generated activity, creating a new generation of tastemakers. How well labels tap this effective source of music discovery will be a barometer of their overall digital strategies.

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