Warner Music Still Holding Out On Last.fm, YouTube

Warner Music Group (NYSE: WMG) is still proving to be the big online hold-out amongst the four music majors. Seven months after it pulled its videos and songs from YouTube, and 13 months after ending its license with Last.fm, fans still can’t play any of WMG’s Madonna, Red Hot Chili Peppers or R.E.M. on those sites.

Two Reuters sources say WMG and Google (NSDQ: GOOG) are “still in talks”, despite Sony (NYSE: SNE) Music Entertainment, UMG and EMI having already renewed earlier this year. No movement with Last.fm either; CBS (NYSE: CBS) told me: “There is currently no agreement in place with WMG.”

At issue for CEO Edgar Bronfman Jr is the same concern expressed by royalty collectors and music umbrella orgs themselves – artists and labels deserve fair recompense for their tunes when used by fast-growing online services. That’s the same stance used by UK royalty house PRS For Music, whose fees YouTube protests are so excessive that the site pulled all premium music to the UK in March rather than pay.

But could WMG’s stance also be hurting its bottom line? In music publishing – the part of a label concerned with generating income through licensing use of songs, as opposed to from getting customers to buy them – Warner’s Q1 digital income fell by $2 million to $7 million due to lack of “cash received”. This could have been royalties missed by Lala and imeem, two services in its own investment portfolio, but the drying up of payments from YouTube and Last.fm won’t have helped.

Bronfman Jr has criticised both MySpace Music and the YouTube/UMG tie-up Vevo for being “slow to create monetization tools”. And, while pretty much all of these streaming websites rely on advertising in an advertising downturn, he’s said: “Advertising alone simply is not going to be enough … any premium video model is going to have to include very significant monetization opportunities above and beyond advertising in order to be effective.” We’re pretty sure YouTube and Last.fm are trying to figure that one out, too.