Audiam to Pay YouTube Creators for Using Its Tracks (Exclusive)

It used to be that users who upload videos to YouTube containing copyrighted music are served with legal threats. In February, they'll have the chance to get a check instead.

Audiam, a company that monetizes cover songs on YouTube, is offering a novel twist on music licensing: give people who use a selection of the company's tracks in their videos the ad revenue generated by those videos for the month of February. The temporary promotion is the latest sign of a sea change occuring in recent years in how music rights holders regard user generated content.

Thanks to a framework that allows for rightsholders to share in YouTube's advertising revenue, the music industry has enthusiastically embraced the platform as a growing source of revenue. Analysts have estimated YouTube's 2013 advertising revenue to be anywhere from $3.6 billion by Barclays to $5.6 billion by eMarketer. Because YouTube is a subsidiary of Google Inc., it does not break out its financial performance.

Audiam is among a growing crop of companies that help labels, publishers, artists and songwriters make money from YouTube. Others include AdRev, INDmusic and Zefr. They do so by sniffing out videos on the platform that use their clients' music and directing YouTube to begin placing ads on those videos. In general, for user-generated videos that use copyrighted content, YouTube shares around 55% of its ad revenues with the rightsholders.

Audiam's move on Thursday isn't unusual. Other companies have cut similar deals with the music industry to allow users to use copyrighted tracks. Fullscreen, for example, has signed a revenue sharing deal with Universal Music Publishing to let Fullscreen artists do covers of Universal's catalog of songs. Audiam's clients include Jason Mraz, Moones, Sons of the Sea, The Bomb Squad, Ron Pope and FreePlay Music Catalog. Jeff Price, Audiam's co-founder, said the company has collected $400,000 in ad revenue for its clients since it opened up shop four months ago.

The arrangement has led songwriters and artists to actively encourage YouTube creators to use their music, a complete turnaround from just five years ago. Audiam's promotion takes the encouragement one step further by actually giving creators money to use its clients' tracks. The deal would apply only to ad revenues generated in February; rights owners will continue to collect the ad revenue generated by the users in all other months. The promotion is meant to kick off Audiam's new tool allowing YouTube creators to select its 

Price said more than 2,000 songs would be available for the promotion, with more being added continually as new clients participate in the program, which promises to forward 100% of the rights holders' share of the ad revenue for February. Creators can register their videos via Audiam's site. With YouTube paying as little as $2.50 for every 1,000 clicks, it's unlikely that independent YouTube creators will be able to get rich from this deal.

Quite the opposite. The incentive is designed to kick off a program, launched Thursday, that hopes to make its clients rich -- at least in the long run.

"For Audiam’s publishers, artists and labels, the new offering means they can now earn more money on YouTube while engaging with fans and rewarding them for using their music," Price said.