Feb 23, 2010 at 06:31 PM
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Sponsored Video Distribution: Future of Music or Shortsighted Death Knell?

The Chicago Rock Band, Ok Go, has been making waves outside of the studio recently starting with a scathing New York Times Op-Ed piece by lead singer Damian Kulash Jr. In the article published last Friday, Kulash Jr. lashes out at label, EMI, for stunting the group's promotional exposure by blocking YouTube's embed feature on the group's newest music videos. While record companies don't earn streaming revenues off of YouTube embeds on external sites, the potential that viral embeds can have as a driver of other revenue streams is undeniable he argues.

"Viral content doesn’t spread just from primary sources like YouTube or Flickr," Kulash Jr. said. "Blogs, Web sites and video aggregators serve as cultural curators, daily collecting the items that will interest their audiences the most. By ignoring the power of these tastemakers, our record company is cutting off its nose to spite its face."

Kulash Jr. then states as an example that views from a recent video dropped 90% following EMI's decision to discontinue embeds, resulting in a paltry $27.77 royalty check for the past six months of streams.

Yesterday however, Digital Music News reported that EMI may have worked up a deal with a sponsor, possibly State Farm, that will allow for the free distribution of OK Go's upcoming "This Too Shall Pass" music video.

While brand participation inside videos is nothing new, a sponsorship which specifically unlocks availability and consumers ability to freely share content among one another, may be.

Digital Music News writes:

Turns out that the upcoming (and updated) video for "This Too Shall Pass" is being sponsored by State Farm - and as a result will be completely embeddable. Perhaps EMI simply wants more than just a reaction from related revenue-generators, instead preferring direct video monetization as well. Is that the better model - and a way for EMI to have its proverbial cake, and eat it, too?

If the still sketchy, but suggested plan works, similar sponsorships would allow labels/artists to get the ancillary benefits of wider social distribution while at the same time provide an additional revenue stream from brand participation. Brilliant if brands step up at a critical mass. Of course, under different circumstances, we may come to realize that the pendulum has swung too far in an effort to tie every piece of content to a direct line of revenue, as would seemingly be the case in this instance. What do you think?