WMG LogoAs per TechCrunch’s pre-announcement, YouTube and Warner Music Group have announced a deal so that Warner can put oodles of video content on YouTube’s site and YouTube’s users can mash that content up (with, one suspects, restrictions).

Earlier there had been concerns that copyright issues - specifically, posting copyrighted music and video content - could spell the end of YouTube. It’s a valid concern; YouTube has an ‘after the fact’ policy whereby they’ll take down offending materials once someone lets them know they’re hosting them.

What’s Warner up to here? It’s a great deal for YouTube, who, with no business model as yet, could be shut down by a series of serious lawsuits from the big networks and media conglomerates.

I’d like to think that this was a move by Warner to preserve YouTube, but my hunch falls on the other side of the sword. There are a few ways this can play out:

1. Warner emasculates YouTube like Bertelsmann emasculated Napster. Too many restrictions, too little licensed content, bad terms of service on user-generated content. With no real competitive advantage, YouTube sees its users flock to sites like Revver or iFilm, and loses its edge.

2. Warner is looking for a ready-made distribution system, and YouTube’s got it. After all, they’ve only had one major system crash in all the time they’ve been up. Does YouTube have secret sauce when it comes to serving the gigantic amount of bandwidth it does every day?

3. Warner sees embedded YouTube as an advertising platform. So many blogs and sites embed YouTube videos that it’s tempting to see these embeds as space to run Warner’s ads. Contrary to general opinion, this can be done without disrupting YouTube’s fast loading process: Just show a single-frame ad at the end of the YouTube video, and keep the still ad in view, with an option to click to the full ad.

Whither YouTube? They’re safe for now, but the bandwidth costs have got to be hurting. Warner’s already got their play in mind, and it doesn’t involve charity.

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