YouTube may be the world's biggest video site, but all the action around it recently has to do with music.

In the UK, Google is blocking access to thousands of musicvideos on YouTube after it failed to reach an agreement with the MCPS-PRS Alliance, the country's main royalty collector. As PaidContent is reporting, the back-and-forth is full of the typical accusations. Google says it was being asked to pay "many, many times more for our licence than before," and would "lose significant amounts of money with every playback."

An MCPS-PRS rep, of course, sees things 180 degrees differently, stating, "Google has told us they are taking this step because they wish to pay significantly less than at present to the writers of the music on which their service relies, despite the massive increase in YouTube viewing."

In most of these types of licensing disputes, the reality is that the licensor (MCPS-PRS) things they deserve more because their content is being viewed so much more than in the past, while the licensee hasn't figured out how to monetize that content enough in order to justify the higher royalties. And so consumers lose out on the content.

Muziic
But what's particularly interesting is how big a deal music is becoming on YouTube. This UK royalty fight isn't the only evidence this week. CNET has a profile of Muziic, a new application that promises free access to tracks from "the world's largest music database — YouTube." It simply searches the billions of videos on YouTube to find ones that use the tracks the person is searching for, and then plays the video in a tiny window (in order to satisfy Google's terms of use), but focuses on the music.

Though it hasn't been shut down yet, Google seems none too happy, telling CNET, "On a preliminary review… it appears that the site violates our API terms of use." Google, of course, can't be happy it will be forced to pay royalties for videos it can't really monetize. And while they haven't yet responded, you can bet your life savings that the labels will want Muziic shut down, since it's essentially an on-demand listening service like Rhapsody for which they're used to getting different, higher royalties than YouTube.

And of course all this is happening against the backdrop of labels talking to YouTube about setting up a Hulu-like site focused on music videos.

Remember when MTV revolutionized the traditional music biz (please tell me you do)? Looks like YouTube might be doing the same to digital music.

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