I, Lamont: OK Go's YouTube problem highlights the music industry's cash struggles

By its own account, OK Go owes its success to YouTube. The band says that a viral video at the dawn of the Internet video era (this would be "A Million Ways," or "Here It Goes Again", about four years ago) put it on the map, and since that time, it has seen YouTube as an important part of its marketing strategy.

But there's a little problem now, says OK Go in an open letter: While anyone can view the band's new videos on YouTube, you can't embed them in a blog post, like I did a few days ago with Hug a Pug. This means the viral potential is severely limited, as the video can't be easily shared with fans' own mini-audiences on blogs and fan sites.

Why has OK Go's record label, EMI, hobbled one of its most popular artists by disabling embedding of the band's videos? Because there is no way to monetize the videos, says vocalist Damian Kulash. YouTube runs ads next to and over videos showing on the site, and the videos producers can get a small cut of the ad revenue. On embedded videos, YouTube can also show ads, but respectable (i.e., deep-pocketed) advertisers often don't want to have their ads running in unknown blogs or sites that post the videos.

Kulash says that the issue illustrates the larger problem of a 20th-century industry trying to keep up with the new digital reality (sound familiar?):

What we’re really talking about here is the shift in the way we think about music. We’re stuck between two worlds: the world of ten years ago, where music was privately owned in discreet little chunks (CDs), and a new one that seems to be emerging, where music is universally publicly accessible. The thing is, only one of these worlds has a (somewhat) stable system in place for funding music and all of its associated nuts-and-bolts logistics, and, even if it were possible, none of us would willingly return to that world. Aside from the smug assholes who ran labels, who’d want a system where a handful of corporate overlords shove crap down our throats? All the same, if music is going to be more than a hobby, someone, literally, has to pay the piper. So we’ve got this ridiculous situation where the machinery of the old system is frantically trying to contort and reshape and rewire itself to run without actually selling music. It’s like a car trying to figure out how to run without gas, or a fish trying to learn to breath air.

So what about Hug A Pug, a YouTube video which can be embedded on blogs? Well, as I pointed out in my earlier post, the company that produced the music video (Ganz) is not trying to sell songs. They're trying to sell something else. Songs like Hug A Pug are purely promotions for other products -- namely, Ganz's stuffed animal line (Webkinz), and the virtual world based on the animals (Webkinz World). In other words, Hug A Pug doesn't need to run ads because it is the ad.

There are alternatives for embedding video, including MySpace and Vimeo, and OK Go has made its latest music video available on both services (see video below). But YouTube's huge reach and advertising potential are issues that the music industry are trying to balance, which means that for the time being the song won't be seen that much outside of YouTube.com and a few other sanctioned places.