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Conflicts world music industry with Youtube is complicated

YouTubeMusic-pass

YouTube and the music industry? It’s complicated. YouTube is the biggest music-streaming service in the world by some distance, but it’s also the biggest villain in the eyes of many within the music industry.

This week, British industry body the BPI has attacked YouTube again over the “value gap” (sometimes “value grab” in the US) between the number of songs being streamed on its service, and the money that those streams are being generated for rightsholders and musicians.

There are several key questions that need answering to understand this battle. Why is the music industry so cross with YouTube? Why does YouTube think those arguments are wrong? And what happens next in this latest clash between the worlds of tech and entertainment?

Why is the music industry so cross with YouTube?

The industry’s current war of words with YouTube boils down to that “value gap” – the sharply-growing number of music-video streams on the service not being matched by similar growth in royalties for labels and publishers.

The BPI is citing stats from 2015 to support this: the number of advertising-supported online music video streams (ie YouTube) last year rose by 88%, yet the royalties paid to rightsholders grew by just 0.4% to £24.4m – less than the £25.1m of revenues from sales of vinyl. US body the RIAA recently made the same points based on its figures for 2015.

The industry is cross that YouTube isn’t paying out more in royalties, but also because it believes that Google’s service is hiding behind “safe harbour” legislation to do it. Those are the laws governing online services hosting user-generated content, which spare them from liability for copyrighted content uploaded by those users, as long as they remove it when notified by the rightsholders.

The relevant legislation – the Digital Millennium Copyright Act (DMCA) in the US and the European Union’s copyright directive are the two currently being discussed most – was enacted in 1998 and 2001 respectively.

The music industry is arguing that those laws are outdated: they were designed for the web hosting providers and email services at the time, not the YouTube of 2016 with its billion viewers and huge music catalogue.

This battle isn’t about YouTube being unlicensed: it has struck deals with labels, publishers and collecting societies to share revenues from advertising around their music, paying out more than $3bn so far to the industry.

The anger comes from the perception that because safe harbour protects YouTube from requiring those licences before it makes their music available, it can negotiate from a position of strength in comparison to, say, Spotify – which isn’t protected by safe harbour, so has to negotiate licences before it can put music up.

This leads in to the next thing that’s fuelling the fire: some in the music industry think YouTube’s massive catalogue of free music is making it harder for Spotify, Apple Music and other streaming services to persuade music fans to pay for their premium subscriptions.

An estimated 68 million people worldwide were paying for streaming subscriptions at the end of 2015, according to industry body the IFPI. That helped label revenues grow slightly – a big deal after more than a decade of decline – but the argument is that they would be growing faster if YouTube was paying its fair share.

What is YouTube’s defence against those claims?

YouTube’s response to these arguments has evolved over time. They start with that $3bn that it has paid out to the music industry, including the claim that around half of those revenues came from fan uploads rather than official music videos.

That’s due to YouTube’s Content ID technology, which the company says it has spent more than $60m developing. It’s the system by which rightsholders upload reference copies of their music to YouTube, which then compares every new upload against its database to check if it uses copyrighted music.

If it does, the rightsholders can set automatic actions: remove the video; track it but leave it online, or “claim” it so that YouTube can sell advertising around it, and share the revenues with the righsholder – this is where the 50% of that $3bn comes from.

One criticism of YouTube’s safe-harbour protection is that in theory, labels would have to send a takedown notice every single time a video is uploaded using their music without permission – when that becomes millions or even tens of millions of notices, it could be a costly, time-consuming game of whack-a-mole.

YouTube says that in practice, Content ID is automating this process for 99.5% of the videos where a takedown might need to be sent: rather than hiding behind safe harbour, it has spent that $60m developing a way to automate the process and make more money for musicians and the music industry – not least because it helps them earn from user-uploads (mash-ups, wedding dances, Harlem Shake buffoonery, whatever) that they couldn’t in the past.

Recently, YouTube has offered an additional defence to criticism from the music industry, claiming that 80% of music listeners haven’t been buyers – they’ve listened for free through the radio or television, but they haven’t bought albums or downloads.

YouTube’s argument is that these people won’t pay for a streaming subscription, so rather than hampering Spotify and co, its free service is at least making the music industry some money from those people, through ads.

Finally, YouTube is pointing to some of the musicians who have built careers on its service, such as violinist Lindsey Stirling, with her 8 million subscribers and estimated annual earnings of $6m from selling music and touring, as well as YouTube. Those non-YouTube revenues are part of its defence too: the fact that musicians get detailed analytics on where their viewers are, and can add links to iTunes, ticketing websites and their own online stores to videos helps them boost their income.

What happens next?

In the US and Europe, existing safe-harbour legislation is currently being reviewed, which is the main reason these arguments have blown up again in 2016. Both sides are lobbying hard for the laws to come down on their side.

Music rightsholders sense that their arguments may be falling on friendly ears – certainly in Europe – while YouTube’s louder public defence of its status suggests it sees the way that wind is blowing too.

The reality of the matter is that even amid these arguments, YouTube will continue to be a hugely important partner for the music industry: from helping new artists find an audience to being a key plank in the marketing campaigns for the biggest albums from Adele to Radiohead.

You can expect to see YouTube continuing to make efforts to launch artist-friendly features, some higher-profile than others. Its “cards” feature, for example, makes it easier for musicians to direct fans off to buy music, merchandise and tickets.

source : www.theguardian.com

Problems between the world of music with youtube, complaints continued to come from the music industry world-renowned labels

YouTubeMusic-pass

In the old days, the music business used to complain that YouTube took their music and didn’t pay them. Now the complaint has changed: Now the music guys say YouTube doesn’t pay them enough.

The music labels have been grousing about YouTube for a while now, but they have recently turned up the volume.

Last month, the RIAA, the labels’ American trade group, lobbed a volley at Google’s video service, arguing that YouTube doesn’t pay a fair price for all the music it gives its users for free. The IFPI, the label’s global trade group, should have a report out shortly which repeats the same charge. (UPDATE: Here’s the IFPI report.)

The complaints come as the big three music labels — Universal Music Group, Sony and Warner Music Group — are set to renegotiate contracts with YouTube.

It would seem like the best way to get more money from YouTube would be to get a better deal this time around. But the labels say their bargaining power is reduced by the 1998 Digital Millennium Copyright Act, which gives broad protection to YouTube and other services that rely on content that users upload.

I asked RIAA head Cary Sherman to explain his industry’s beef with both the DMCA and with YouTube. Here’s an edited excerpt of our conversation. There’s also a response of sorts from YouTube at the end.

Peter Kafka: I don’t understand why the industry is complaining about YouTube and its use of the DMCA again. Viacom spent years on this in court, and got soundly defeated. Hasn’t everyone learned to accept this by now?

Cary Sherman: We accept the inevitability of death. It doesn’t mean we have to like it. There is now under way a study of whether the DMCA is actually effective and fulfilling its intended purpose, being conducted by the Copyright Office, and it has given us an opportunity for the community to collect our thoughts about just how dysfunctional the DMCA actually is. And to actually tell the government about it.

A lot of people would argue that the DMCA allowed Silicon Valley to build really big, really amazing and wonderful things. And that on the whole it’s a net plus for the U.S. and the world.

That assumes that only with the DMCA, as it was written in 1998, would that have been possible. We feel like the 1998 Internet is not the Internet of 2016. It’s a dramatically different Internet, and it’s time to take a fresh look at whether the balance that was struck in 1998 is effective in 2016.

And the answer is clearly “no.”

Just look at Silicon Valley. They’ve done an extraordinary job, and their market cap is worth gazillions of dollars. Look at the creative industries — not just the music industry, but all of them. All of them have suffered. We’re half the size we were. And we’re flat, and we haven’t been growing. And that’s true of all of the creative industries.

For the music industry, 70 percent of revenues now come from digital. We’ve licensed every different kind of model, but the revenues just aren’t coming in.

One of the problems is piracy, which continues to be a problem. The other is under-monetization, and that’s because of things like the DMCA, where some companies get the benefit of being able to distribute our content, without taking fair market value kind of licenses.

When you compare what we get when we get to freely negotiate, with a company like Spotify, vs. what we get when we are under the burden of an expansively interpreted “safe harbor,” when you’re negotiating with somebody like YouTube, you can see that you’re not getting the value across the platforms that you should.

What’s the single biggest change in the DMCA that you’d like to see?

Notice and stay down, instead of notice and take down. There are 100 copies of a song. We can’t just say to YouTube “we didn’t license this Pharrell song, take it down.” They will not just take down all 100 copies. They’ll take down only the one file that we’ve identified. We have to find every one of them, and notice them, and then they’re taken down, and then immediately put right back up. You can never get all the songs off the system.

If we had a system where once a song was taken down, you had a filtering system that prevented it from going back up, we wouldn’t have to be sending hundreds of millions of notices on the same content over and over again.

Maybe then we’d begin to make a difference with all the pirated copies on all of the websites. But as long as there isn’t a stay down, we can’t deal with that. It’s just not possible.

The labels do have deals with YouTube. If they don’t like those deals, why not negotiate better ones or walk away? All of them expire this year.

The way the negotiation goes is something like this: “Look. This is all we can afford to pay you,” YouTube says. “We hope that you’ll find that reasonable. But that’s the best we can do. And if you don’t want to give us a license, okay. You know that your music is still going to be up on the service anyway. So send us notices, and we’ll take ’em down as fast we can, and we know they’ll keep coming back up. We’ll do what we can. It’s your decision as to whether you want to take our deal, or whether you just want to keep sending us takedown notices.”

That’s not a real negotiation. That’s like saying, “That’s a real nice song you got there. Be a shame if anything happened to it.”

So you’re saying the labels aren’t really free to walk away from YouTube — that their music stays up there whether they want it to or not.

We have experience with this. Because Warner Music, a few years ago, decided that they didn’t want their music on YouTube, because it was hurting all the rest of their deals. So they didn’t do a license with YouTube. A year later, they threw in the towel. What was that year like? They spent a fortune trying to take down their music. They could never even keep up with all the counter-notifications that were constantly being filed, so the music was going right back up anyway. And they were earning no revenues at all. So finally they threw in the towel, and accepted the licenses.

That’s what it’s like to negotiate, when somebody can claim the benefit of an expansive safe harbor. They’re taking the benefit of a safe harbor that was intended for people who were passive, neutral intermediaries. People like Verizon, where the content is just passing through their system. They’re not making money off of distributing content. YouTube does.

Katy Perry, among other people, is lobbying on behalf of the music business. It seems like getting rich musicians to press your case won’t help you change the laws. Do you think there’s a practical chance that will happen?

Two different questions. First: Katy Perry. The petition she filed makes clear that she’s worried about the next generation of songwriters and artists that are coming up. She isn’t complaining that she isn’t making enough money.

She made that money in the era that you’re complaining about. She made that money as a YouTube star.

Yeah. Well, the reality is that the industry is more stratified than ever. There are some people who have done really well. But it’s harder and harder for more musicians to make a living. Because the revenue that they’re getting from streaming isn’t keeping pace with the revenue that they used to be able to earn. We’re trying to get to a point where the streaming ecosystem works for everybody.

In terms of whether Congress will do something about it? We don’t know. It’s hard to get anything through Congress. But Congress has been taking a look at the copyright law for 3 years now. We want them to understand that one of the most important things affecting the value and ability of copyright to survive, is to take a fresh look at the DMCA.

It’s complicated, right? The labels used to be investors in YouTube, right before it sold to Google. Two of the labels are partners with YouTube in Vevo. It doesn’t look like they’re in real opposition. It looks like they’re partners who don’t like terms of a deal they did.

I think the record companies would like to be partners with YouTube. But it’s a little hard to call it a partnership when it’s so one-sided in terms of the negotiating leverage.

Some of the loudest voices against YouTube used to be the video companies – movie studios, TV companies. Viacom was the one who sued them. They’re not vocal in the way that the music labels are now. Why aren’t they joining you?

Maybe it’s because YouTube is not the place where you go for your pirated movies. But it certainly is the place you go for your pirated… I shouldn’t call it pirated. It’s “user-uploaded.” They’re putting up an entire album, and a picture of the artist, and therefore YouTube has become the largest on-demand music service in the world.

I offered YouTube executives the chance to rebut Sherman’s argument via a separate Q&A, but they declined. The company did point me to the response they offered when the RIAA criticized them last month:

“To date, Google has paid out over $3 billion to the music industry – and that number is growing year on year. This revenue is generated despite the fact that YouTube goes way beyond music to include popular categories such as news, gaming, how-to, sports and entertainment. And with the recent launch of the YouTube Music app, we recently launched a new, dedicated music experience with the goal to deliver even more revenue to both artists and the music industry more broadly. Past comparisons to other audio-only, subscription music services are apples to oranges.”

YouTube and Google have also responded in more depth, via the comments they’ve filed to US Copyright Office as part of the study Sherman mentioned. Here’s a passage that deals with many of the RIAA’s complaints:

Some in the recording industry have suggested that the safe harbors somehow diminish the value of sound recordings, pointing to YouTube and blaming the DMCA for creating a so-called “value grab.” This claim is not supported by the facts. As an initial matter, it is important to understand that YouTube has had license agreements in place with both major and independent record labels for many years; it is simply incorrect to say that YouTube relies on the DMCA instead of licensing works. Those pressing the “value grab” argument also assert that the royalty rates in these licenses are too low, allegedly because the DMCA’s notice-and-takedown process makes it too difficult for record labels to withdraw their works from YouTube in the face of users re-uploading those works. This claim, however, ignores Content ID, which has been in existence since 2008 and which record labels (and many other copyright owners) use every day to monetize their works on YouTube. Thanks to Content ID, record labels do not have to rely solely on the DMCA’s notice-and-takedown process on YouTube—they can remove any or all user-uploads of their works from the platform on an automated and ongoing basis. Indeed, since January 2014, over 98% of all YouTube copyright removal claims have come through Content ID. Although business partners can be expected to disagree from time to time about the price of a license, any claim that the DMCA safe harbors are responsible for a “value gap” for music on YouTube is simply false.

Source : http://www.recode.net/