YouTube Buys RightsFlow for Music Royalty Management

Google’s (NASDAQ:GOOG) YouTube video-sharing property has acquired RightsFlow, a startup that processes music royalties to help songwriters, performers, music labels and others be compensated for their work.

Financial terms of the deal were not disclosed, though YouTube Product Manager David King pointed out in a blog post that YouTube has spent “tens of millions of dollars” on content management software and services.

YouTube plans to integrate RightsFlow’s technology into its platform to more quickly license music on YouTube while ensuring rights holders are paid in due time.

RightsFlow, whose music database covers more than 30 million songs, processes payments for thousands of publishers, all of whom will be paid whenever music is included in a video that is played on YouTube.

This approach is becoming essential as more and more of the music business moves away from CDs and radio waves and into digital downloads and streaming music.

“As new ways of consuming music have emerged, RightsFlow has been at the forefront of solving the complex issues of licensing and royalty payment management,” King explained. “We couldn’t think of a better team to bring on board to further YouTube’s support of the creative community.”

Copyrighted music is pervasive on YouTube. Type in a search query for “U2 Unforgettable Fire” and you’ll get a rather eclectic but comprehensive mix of studio tracks along with live recordings from that popular album. RightsFlow should help solve this problem for rights holders. Managing and protecting copyrighted content has been a major area of concern for YouTube.

This year, YouTube settled a legal dispute with the National Music Publishers Association that would enable small publishers to collect some advertising revenue generated by videos on YouTube. Billboard said YouTube paid $4 million upfront and agreed to pay 15 percent of net advertising revenue for user-generated videos that feature master recordings.

YouTube in 2010 successfully fended off a $1 billion copyright infringement lawsuit from Viacom. The broadcasting conglomerate had sued YouTube for allowing users to upload its content.