You may have heard that YouTube, the largest source of music in the Sagittarius arm of the Milky Way, is about to launch a streaming music service. You may have also heard that they’ve set some terms that quite a number of indie labels consider quite unfair. YouTube is unbending: agree to our rules or have your content pulled down. (Actually, that’s not true at all. Here’s the real story.)
Some observers think that this is extremely heavy-handed of YouTube. Other believe that YouTube has every right to dictate how they will do business and under what terms they will allow content to be broadcast. Those who hitch their fortunes to another company’s business plan have nothing to complain about.
Let’s start with the indies’ complaints. This is from Billboard:
Right after Amazon appeared to take independent labels for granted with a take-it-or-leave-it payment scheme for its new streaming service, YouTube’s lower-than-market rate offer for its planned subscription service is causing major agita for the indie sector.
That’s because the rates it is offering are also backed by the threat that if their compensation scheme is refused for its paid subscription service, they will be taking those labels off the gravy train of its ad-supported streaming service, which pays out hundreds of millions of dollars annually to labels and publishers.
Not only will YouTube hurt indie labels in their collective pocketbook for refusing to sign its deal for the service, it will be kickking sand in their faces too, because it will likely leave their music up on its site for anybody who wants to play them — it just won’t monetize those music videos by putting advertising against them.
Music Industry Blog picks up the thread.
YouTube (i.e. Google) has put itself in the midst of a music industry conflict that may yet turn into a much need process of soul searching for the labels as they weigh up whether YouTube’s contribution to their business is net positive or net negative. The controversy surrounds the imminent-ish launch of YouTube’s premium subscription service and the refusal of some independent labels to sign the terms Google is offering them.
Whereas normally this would just result in a service launching without a full complement of catalogue, in this instance YouTube is also the world’s second largest discovery platform after radio. YouTube execs have been quoted as stating that labels that do not sign their terms will have their videos blocked or removed.
Exactly from where (i.e. the main YouTube service, or the premium offering) remains a matter of conjecture with both sides of the debate more than happy to allow the ambiguity cloud the debate.
But the fundamental issue is clear either way: YouTube has become phenomenally powerful but delivers comparatively little back in terms of direct revenue and is now happy to flex its muscle to find out who is really boss.
Then there’s the opinion that the indies should stop whining. Bob Lefsetz wrote something the other day that the indies have nothing to complain about because they’ve been enjoying YouTube’s vast distribution for years at zero cost. So when YouTube decides to change the way they do business, that’s the price they have to pay. When you hitch your fortunes to a company over which you have no control, them’s the breaks.
You can’t have it both ways. Partake of the service and then bitch that you don’t like the terms when suddenly it’s your effort involved.
It’ll be interesting to see where this whole thing ends up.