YouTube's deal with Warner Music is the harbinger of dramatic changes in the way that music is licensed and used on the popular site. According to the Wall Street Journal (WSJ), YouTube will implement some manner of automatic system for identifying and crediting the Warner Music when tracks it owns are used within user-created videos.

"[T]he new system will give YouTube users a legitimate way to create videos with soundtracks that use music from Warner artists. (Videos of amateurs' lip syncing or juggling to popular songs are among the most viewed on video-sharing sites.) YouTube's system will identify such videos and give Warner a share of the revenue for any ads that appear alongside these videos, if Warner opts for that rather than having the videos removed."

This is a complex issue but, it brings up several points, chief among which are mechanical rights and publisher rights. If Warner Music is getting a share of the revenue, is The Harry Fox Agency next? If you record a live performance of your favorite band with your cellphone, and upload that to YouTube, is ASCAP/BMI going to come calling for performance rights?

Obviously, and as Jason Calacanis has pointed out many times, YouTube's business model is unsustainable unless it can deal with issues such as this. My fear is, as much with SpiralFrog, will the artists receive any royalty share from Warner Music when their music is used on YouTube?

[WSJ via Coolfer]