The effort, codenamed "Vevo" according to the Wall Street Journal, would involve a new showcase for music videos on YouTube, with the notion of commanding higher advertising rates. Right now, YouTube makes pennies per view — if it's lucky. Most of YouTube's bandwidth-consuming video funhouse goes unburdened with revenue.

In December, Warner abruptly withdrew its music videos from Google. Most people assumed Warner was throwing another typical record-label fit and being unreasonable. The word from the Googleplex, though, is that the Warner deal was a victim of CFO Patrick Pichette's cost-cutting crusade. In YouTube's early days, the video site had struck a deal, then hailed as groundbreaking, to pay Warner to play copies of its music videos uploaded by users and thereby avoid a massive copyright-infringement suit. But that deal was rather richer for Warner than for YouTube. Google executive Jonathan Rosenberg explained the move on a recent conference call with analysts:

... we'd love to work with Warner. But I think we're going to continue to do what we've been doing; try to continue to make mutually beneficial deals and then try to do some of the things like we talked about on the earlier call with respect to better monetizing YouTube ...

In other words, Google just doesn't make enough off of videos to justify the rates it's been paying Warner and the other labels.

Did Warner walk, or did Google dump it? It's still not clear. What is clear: There's not enough money in online music videos to go around. Google and Universal are negotiating a deal in the hopes that there will be.

But what if there's not? In the '80s, teenagers stared slackjawed at MTV, because there simply wasn't anything else like it on the air. But now, thanks largely to YouTube, there's a surfeit of video everywhere you go. And traditional three-minute music videos, while they satisfied an '80s attention span, are too long for the YouTube generation, which likes its clips a minute or less. (A classic video like Take On Me seems epic now.) Perhaps the record labels should count themselves lucky if they get a link to iTunes, let alone a revenue share — and that anyone still wants their music videos at all.

Artist and designer Glenn Kaino originally envisioned the site as a social network for jetset hipsters, and his cousin Scott Sassa signed on as CEO after a spell at venture-capital firm Kleiner Perkins. You might remember Sassa as the CEO who presided over Friendster's slide into irrelevancy, or as a Hollywood executive managing NBC's West Coast entertainment operations. Sassa likely was the one to hustle up the investors, as well as celebritard users like Rob Lowe, Lisa Ling and Cory Kennedy.

But in May, the site was drawing only half a million users a month according to Nielsen Online. (Sassa put the number at 2 million.) That's orders of magnitude smaller than similar sites like Six Apart's Vox or off-the-shelf social network Ning, either of which could have done more for Discovery with less money.

Our theory: Events on Wall Street did have something to do with Uber's shutdown. But not the way Uber would like you to think — that the site was a thriving concern kneecapped by some kind of mysterious liquidity crisis. No, the market meltdown merely provided the convenient excuse to close down a stinker of a company. Expect more cash clawbacks in the months to come — from startups that should never have gotten money, in good times or bad.

It's called radio, and more recently, music videos. In both cases, record labels basically paid to promote album sales — either through payola, in the case of radio, or through seven-figure film budgets, in the case of music videos. The content itself was given away for free. Thankfully, digital tools make recording and mastering that much cheaper as well. The only change in thinking (and artist contracts) required is to see the recordings themselves as a loss leader for stuff you actually can sell, like tickets and T-shirts, fan club memberships and licensing rights.

The new MySpace Music, like industry-backed efforts with MusicNet, PressPlay and Bertelsmann's Napster, is doomed to failure because the labels persist in seeing recorded music as a profit center, not as a promotional platform for leveraging artists' brands. Of the four majors, only EMI hasn't signed on with that effort yet, and if former Googler Douglas Merrill has any sense, he'll tell the company not to bother. (Photo by AP/Peter Kramer)

Best of all: Qtrax CEO Alan Klepfisz claimed he wasn't trying to mislead anyone: "We feel we have been unfairly crucified because a competitor tried to damage us." Klepfisz didn't name names, but we're reminded of Pogo: "We have met the enemy, and they are us."

There's no one in the record company that's a technologist. That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?

Not because Apple's position is unassailable. Not because the music studios are lethargic and notoriously bad at building technology — never mind technology that can reach every platform and device and properly share revenue amongst all artists and labels involved. There are more fundamental problems.

The first problem is thinking that consumers will see this as free and embrace it. Cell-phone carriers, Internet providers, and gadgetmakers are expected to bake the subsidy into the cost of what they are providing. The users, who haven't taken to paying for their own music subscriptions, will see this for what it is. Devices keep getting cheaper. Consumers won't pay extra for an MP3 player, particularly if they only want to play the music they already own. A $5 increase to a monthly cell-phone bill will clearly come across as an additional charge. Users are also likely to have more than one device or service with these additional fees attached. Won't they, inevitably, see this as the music industry double- or triple-dipping?

Secondly, the entire cost burden is placed on the providers. Morris hopes they'll happily accept this arrangement because they'll see the benefit of increased sales. But if every device and service can provide the offering, why would any one player see increased sales? They won't — just increased costs. Morris has proposed tacking on an extra $90 to the cost of a gadget. Microsoft may have caved to a smaller subsidy for its Zune, but no one will accept a $90 subsidy that gains them no advantage.

Morris's Total Music plan sounds like the all-encompassing strategy that the music industry should have had before Napster emerged nearly a decade ago. With a venture called Pressplay, now owned (ironically) by the reborn Napster, Universal has already tried its hand at digital music and failed. Morris has come up with a plan that benefits his industry, not the consumer and not the technology business. By thinking big, he's just made it clear how small his company's role in digital music is doomed to be.

Trent Reznor, frontman for Nine Inch Nails, is on the warpath against his record label, Universal Music Group. In Sydney, Reznor kicked off the NIN concert with an appeal to the crowd to steal his music until the labels realize they're ripping people off. This follows his attack on the recording industry while playing the Beijing Pop Festival earlier this month. He asked Chinese fans who couldn't obtain legal copies of his album to download it off the Web. Reznor views labels as greedy entities — charging progressively more for records without passing any additional revenue to artists. Once the band's contract with Universal is finished, Reznor plans to sell music directly to his fans for about $4 an album.

MySpace sued for copyright infringement [CBC via Boing Boing]
Universal Music Sues MySpace, Claiming Copyright Infringement [WSJ]