SAN FRANCISCO – Cingular Wireless LLC has agreed to sponsor an online battle of the bands on YouTube Inc., providing the Internet's most watched video site with a cash infusion as the rapidly growing startup tries to prove it will be able to parlay its popularity into profits.
Financial terms of the deal announced Wednesday weren't disclosed.
The backing of the nation's largest cell phone provider has symbolic as well as financial value for San Mateo, Calif.-based YouTube, which serves up more than 100 million videos per day.
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Because many of those videos feature risque and bawdy material, some analysts have questioned whether major companies will want their brands stamped on YouTube's site.
But Cingular, a joint venture of BellSouth Corp. (BLS) and AT&T Inc. (T), shrugged off those concerns and agreed to pay for a competition that will invite bands without recording contracts to submit videos from Oct. 2 through Oct. 18.
After YouTube users vote for the finalists, winners will be picked in four categories — best song, best music video, best live performance and best creative work.
Atlanta-based Cingular views the sponsorship as a way to promote its efforts to connect with music lovers as it tries to sell more mobile entertainment options.
"We look forward to building our relationship with YouTube and demonstrating our unique approach to mobilizing the music experience for our customers," said John Burbank, Cingular's vice president of marketing.
If it can't win the support of big advertisers like Cingular, YouTube figures to have a tougher time to pay its rising bills — a circumstance that might force the privately held company to raise more money from outside investors or seek a buyer.
News of the Cingular sponsorship comes just a few days after another major milestone in YouTube's evolution.
Warner Music Group Corp. (WMG), the nation's third-largest recording label, has agreed to transfer thousands of its commercial videos to YouTube and license its library songs to amateur video makers in a deal that may help ease the piracy concerns looming over the site.
YouTube has been subsisting on credit card debt and $11.5 million in venture capital since Hurley and Chen, a pair of 20-something buddies, launched the company in a Silicon Valley garage 19 months ago.