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Can the Music Biz Save Itself Online in '09?

As the movie and TV industries struggle to reinvent themselves for the digital future, the music industry is constently used as an example of what NOT to do.

So now, when many have left the traditional music industry for dead, can it reinvent itself online using the existing tools? The four major music labels are trying to do just that: teaming up to create a new online video venture.

Instead of just taking a cut of the revenue when music videos are played on YouTube alongside ads, now they're working on their own site. The Financial Times reports they'll either go it alone for a new site or will work with YouTube to launch a premium channel or work with Hulu for their own site. But in early December Warner Music pulled videos from YouTube over a debate about compensation for cover songs uploaded on the site.
(Note: Hulu is a joint venture of News Corp. and NBC Universal, which is corporate parent of CNBC.)

It seems like this is the type of site Viacom's MTV should have launched nearly a decade ago — if it had, MTV could own the chunk of music sales that Apple's iTunes now does. But the very reason the music labels are trying to do this themselves is because they want to avoid what happened when MTV played their music videos without compensating them — using them just to drive album sales. It's no secret that album sales — even including digital downloads — are on a drastic decline, so the labels are looking for control.

Will the majors try to incorporate the independent labels? We'll see. But it'll be interesting to see if the majors try to work within existing constructs, or if they try to reinvent the system.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.