YouTube has been one of the stories of 2006, but it's been especially interesting since two major music groups have addressed the website. On one hand, Warner Music Group has been lauded for extending a revenue-sharing olive branch to YouTube. Universal Music Group has been widely ridiculed for its insistence that YouTube owes it millions of dollars. (One exec, quoted in a new article at Newsweek, pointed out a problem with WMG's deal: "YouTube has no ad revenue to split.")

It's certainly possible UMG is sending signals to the market. Reports have said UMG is negotiating with YouTube, but UMG chief Doug Morris took a hard-line stance a few weeks ago. EMI and Sony BMG may look to UMG's stance and hold out for a better deal.

The hold out may be a good negotiation tactic, but the remaining three majors really need to consider joining WMG in working with YouTube. It's imperative that the majors embrace experimentation. YouTube is that experiment. It's time to start throwing things against the wall to see what sticks.

If you're to believe Mark Cuban, who thinks YouTube will be sued, and Forrester analyst Josh Bernoff, who guarantees YouTube will be sued and lose, you view YouTube's infringement as analogous to Napster's infringement. In the halls of justice, YouTube might be just as guilty as Napster, but there's a huge difference between the two: YouTube does not offer a near-perfect substitute for anything the labels currently sell. Its videos cannot be downloaded, the video is poor and the audio is regularly out of sync. (Streams of many of the videos on YouTube can be accessed at no charge at the websites of record labels and bands.) In contrast, Napster allowed people to download files that were near-perfect substitutes for commercially available tracks.

Though major labels are hesitant to pass on an opportunity to set a legal precedent, they should view YouTube as a complement rather than a substitute. YouTube videos complement products -- audio, video, ring tones -- sold by labels. YouTube increases awareness of labels’ products and facilitate access to their catalogs. Substitutes should compete against each other. Complements should work together.