YouTube to block indie labels who don't sign up to new music

General Intelligent Discussion & One Thread About That Buttknuckle

Moderator: Andrew

YouTube to block indie labels who don't sign up to new music

Postby tater1977 » Wed Jun 18, 2014 8:26 am

YouTube to block indie labels who don't sign up to new music service

Starting internal tests of subscription service but faces accusation of 'catastrophic error of judgement' ... bscription

YouTube's Robert Kyncl on licensing: 'While we wish that we had 100 per cent success rate, we understand that is not likely an achievable goal'. Photograph: Ethan Miller/Getty Images

Independent artists could disappear from YouTube "in a matter of days" after the Google video service confirmed it was dropping content from independent labels that have not signed up for its upcoming subscription music service.

YouTube is about to begin testing the new service – which will charge people to watch and listen to music without ads, and download songs to their mobile devices – within the next few days, initially within Google.

The company's head of content and business operations, Robert Kyncl, told the Financial Times that the service – previously rumoured to be called YouTube Music Pass – will launch more widely later in the year.

His confirmation that YouTube will block videos from labels that do not sign licensing deals for the new premium tier will be hugely controversial among indie labels, with trade body WIN already filing a complaint to the European Commission about its negotiating strategy.

"While we wish that we had 100% success rate, we understand that is not likely an achievable goal and therefore it is our responsibility to our users and the industry to launch the enhanced music experience," said Kyncl, claiming that YouTube has signed up labels representing 90% of the music industry.

Independent labels are likely to disagree. Their licensing agency Merlin estimates that indies collectively account for a 32.6% market share of the recorded music industry's sales and streams.

Contacted by The Guardian following his comments, WIN's chief executive Alison Wenham was blunt in her response. "They have suffered a simple but catastrophic error of judgement in misreading the market," said Wenham, who had organised a press conference earlier in the month to protest at YouTube's plans.

Wenham said YouTube was "setting itself up for failure" and only a small number of independent labels would agree to its terms.

"We have tried and will continue to try to help YouTube understand just how important independent music is to any streaming service and why it should be valued accordingly. Music fans want a service that offers the complete range of music available. This is something that companies such as Spotify and Deezer do, both of whom have excellent relationships with the independent music sector," she said.

WIN claims that the company has signed lucrative licensing deals with major labels Universal, Warner and Sony, while demanding that independent labels sign up to inferior terms or face having their videos blocked from YouTube's free service.

“Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry,” a Google spokesman said. He said the subscription-based service would bring new revenue streams “in addition to the hundreds of millions of dollars YouTube already generates for them each year. We are excited that hundreds of major and independent labels are already partnering with us.”

Wenham's criticism echoes a claim made at the event by musician Billy Bragg, who said "I don’t know why they’ve opened this hornet’s nest right now, apart from corporate hubris. I don’t think they realise what a stupid thing they’ve done."

Artists including Adele, Arctic Monkeys and Jack White could see their videos taken down. The site has become a key promotional outlet for independent labels of all sizes in recent years.

YouTube attracts more than 1bn monthly viewers, with music one of its biggest categories. Its upcoming premium music subscription tier will compete with Spotify, Deezer and Napster among other services, including Apple-owned Beats Music and Google's own Google Play Music All Access.

Independent labels have long complained that they deserve more respect from digital music services negotiating licensing deals, and set up Merlin to strike deals on their behalf.

The agency has remained silent throughout the recent arguments about YouTube's planned new service, although its chief executive Charles Caldas criticised the company at an industry conference in late April.

Referring to an earlier quote from Bragg suggesting that musicians unhappy about royalties paid by Spotify should be "marching to YouTube central with flaming pitchforks", Caldas said: "I can’t say Billy’s right, but I can say that he’s not wrong."

The move comes as Amazon too has begun to flex its muscles in ways that limit the content its customers can receive. Amazon is delaying shipments and refused pre-orders for some titles from Hachette, publisher of Harry Potter author JK Rowling, and home to David Baldacci, Stephen Colbert, David Foster Wallace and others.

It has also pulled pre-orders for forthcoming Warner Home Video features, including international blockbuster The Lego Movie, 300: Rise of an Empire, Winter’s Tale and Transcendence.

• YouTube accused of strong-arming indie labels into poor deals
Perry's good natured bonhomie & the world’s most charmin smile,knocked fans off their feet. Sportin a black tux,gigs came alive as he swished around the stage thrillin audiences w/ charisma that instantly burnt the oxygen right out of the
Stereo LP
Posts: 4961
Joined: Thu Sep 02, 2010 1:05 am
Location: USA

Re: YouTube to block indie labels who don't sign up to new m

Postby tater1977 » Tue Jun 24, 2014 2:45 pm

Inside YouTube's Controversial Contract with Indies

By Ed Christman, New York | June 20, 2014 ... on-service

Billboard has obtained a typical contract being offered by YouTube to its indie label partners for its new subscription service. The devil is in the numbers, but also in the overall strategy.

Even though YouTube is said to be offering lower rates than those paid by services like Spotify and Rdio for its new subscription service, that isn't even the part of its licensing contract drawing the most anger from independent labels.

According to early versions of the YouTube licensing contracts for indie labels and indie publishers, copies of which were obtained by Billboard, YouTube will pay either a percentage of revenue or a minimum per subscriber to its service, whichever is greater.

The YouTube contract says its premium service rate for audio-only music adds up to payments of 65.5% of the service’s revenue — 55% to labels and 10% to publishers and performance rights organizations. For music videos the rate breaks down to 55% of revenue, with 45% going to labels and 10% to publishers.

As for the minimum subscriber rate, YouTube is providing an alternative revenue bucket of $5.50 per subscriber per month to labels and 50 cents to 80 cents per subscriber per month, depending on the music product, to music publishers.

Although the contract that Billboard has obtained appears to be an early version, indie label and publishing sources confirm that the rates are still the same.

Those company payment percentages are lower than the combined 70% in revenue (approximately) that the interactive, premium component of services like Spotify or Rdio pay to labels and publisher rights owners, according to label and digital service sources.

But, it turns out, indies’ unhappiness with YouTube has more to do with contract terms other than the rates they would be paying.

The main beef with YouTube is the company's take-it-or-leave-it approach, which they say includes an onerous and negative most-favored-nation clause. If any major label or major music publisher agrees to any rates for the YouTube service that are lower than the rates set forth in the YouTube contract, Google will have the right to reduce the indie labels' analogous rate accordingly.

Indie executives are furious about this clause because they say that the majors can likely negotiate a three-prong payment scheme that will either include a non-recoupable advance, or a per-stream minimum rate that will negate the percentage rate from kicking in. And since indies don't have the ability to negotiate a third prong to the YouTube payment scheme, they are the ones who would get stuck with a reduced payment, not the major labels.

But some kind of most-favored-nation clause is a standard term across all other music services, a Google source says. This clause is to ensure that all labels -- majors and indies alike -- would get the same deal for future partners integrating with the service. To claim that the impact of this clause disproportionately affects indies would be inaccurate, they claim.

So, if YouTube was was to launch a promotion for the service or bundle the service with another player -- for instance a mobile carrier which had different terms with labels -- then the bundle would offer the same rates to all labels -- the lower rate, not the higher one.

But one service provider points out that Google is acting similar to how iTunes and Amazon operate. "When iTunes introduced its matching-cloud service, the labels were not given any choices. They were told 'this is the service, you will be in it and here is what we will pay,'" that executive recalls. "There wasn't any outcry from indies then. Google sees itself on the same level as iTunes and acts accordingly."

The other major issue that indies have with YouTube's premium service centers on the ad-supported service. By moving to compete against services like Spotify and Rdio, indie labels argue that YouTube needs to bring the ad-supported component of its service to parity with payments for all music streamed in the ad-supported services of its competitors.

Currently, in its ad-supported component, YouTube only pays on those music videos that have advertising connected to it. If a song or music video has all the rights owners assigned to it, but there isn't enough advertising inventory to put an ad against a play(whether an ad buy against a host of videos has been exhausted or that particular crop had none bought against it), then that play is not monetized. But YouTube's competitors have a formula to pay labels for every single play in their services.

In the ad-supported version, "they are saying they may monetize our music, but there is no guarantee that they will," says one executive in the indie label camp. "We know that in the other interactive services every piece of our content will be monetized. But YouTube is moving the goalposts on us, and may only monetize 90% of our content. If you already have lower rates and then [they] may not monetize all our content, that further reduces the revenue bucket."

However, a YouTube source says that if every video had ads against it, it would drive away users and reduce plays. By mixing up videos with commercials and ones without them, YouTube is trying to keep its user base high and drive up overall advertising revenue. "In the long run, this will bring more revenue and be a good experience for everyone involved, the artist, [rights owners], viewer and the advertiser," that source says. "Now that we are adding the premium component, we have also improved payment terms from what they were initially for some of the music categories in the ad-supported component."

Still, indie labels are worried that the other subscription services will complain about all the free plays on YouTube's service, and will go on to make similar demands. Moreover, indie labels say that they are bothered that YouTube has no stake in growing the premium business, because they do not provide indie labels with a minimum-guarantee requirement, such as a minimum per-stream rate for plays.

The majors wanted to insure that YouTube had skin in the game, so they pushed for and got some type of minimum-guarantee requirement, according to major label sources.

Although the indies may not like that they didn't get the third revenue bucket, it sounds like YouTube does in fact have skin in the game due to those agreements with the majors, which could prove costly if it doesn't aggressively promote its premium service.

Finally, indie labels worry that the YouTube subscription service will not grow the overall pie, but rather cannibalize users from other services -- or even its own ad-supported service. And, since it is paying that lower rate of 65.5% in the premium service, it could actually reduce the overall pie.
Perry's good natured bonhomie & the world’s most charmin smile,knocked fans off their feet. Sportin a black tux,gigs came alive as he swished around the stage thrillin audiences w/ charisma that instantly burnt the oxygen right out of the
Stereo LP
Posts: 4961
Joined: Thu Sep 02, 2010 1:05 am
Location: USA

Return to Earmuffs For The Blind

Who is online

Users browsing this forum: Google [Bot] and 3 guests