Pennies from heaven

Saw this article in the New York Times yesterday about how the three music companies that had signed licensing deals with YouTube shortly before it was bought by Google were actually signing on to take small stakes in the company. Collectively Warner Music, Sony BMG and Universal Music Group can net as much as $50 million from the deals.

The music company's arrangements will allow them to place advertising next to their talents' clips. The idea is also that YouTube will use new software to better police the site for material that has been copyrighted and is posted illegally—a problem that is causing pain for YouTube in other corners of the world too.

Three things about this news:

(1) I wonder how much adverts will put people off from using sites like YouTube. Already there seems to be some backlash against content marketeers posting their goods online, posing as average people with heartfelt recommendations.

(2) In the face of backlash from other content companies that have not yet signed deals with YouTube, how will the video sharing site justify using its special software to vet for some illicit content but not all of it?

(3) Now that the most popular social networking sites are getting more expensive, will strategic stakes in the top companies be the way that content providers ensure they get their piece of the action?