Sony BMG close to music video deal with AOL-source

05/25/2005 1:50 PM, Reuters


Sony BMG, the world's second- largest record company, is close to a deal that will grant America Online rights to its music video catalog, potentially opening up a new source of revenue for the label, a source familiar with the matter said, .

A deal could be announced within a couple of weeks, but details still need to be worked out on how much exclusivity AOL will get as part of the deal and how much that exclusivity is worth.

Both Sony BMG and AOL declined to comment.

The New York Post reported that AOL could pay more than $25 million for rights to Sony BMG's video catalog, which includes such artists as Beyonce, Bruce Springsteen and the Dave Matthews Band. But sources familiar with the matter say negotiations are ongoing.

Sony BMG Chief Executive Andrew Lack is considering granting Time Warner Inc.'s AOL, the top Internet service provider, "a certain amount of exclusivity," which would be a departure from other online music video deals in which labels have granted access to more than one online service.

The music industry has been looking for new avenues for revenue, as sales of compact discs face competition from piracy, online music services like Apple's iTunes and other forms of entertainment such as video games and DVDs.

While labels have often allowed online services access to videos for promotional purposes, labels are turning to their catalogs of videos as a new source of revenue.

Universal Music, the largest music label, has deals with AOL, Yahoo and Microsoft's MSN . The label also recently started charging services for access to its videos, either through a fee-per-view or through advertising revenue sharing.

Warner Music has a similar deal in place with AOL and a source familiar with the matter said it is close to new revenue sharing and fee arrangements with Yahoo and MSN. EMI Group Plc said it is in discussions with several parties regarding online access to its music video catalog.