MUSICIANS, YOUTUBE FACE OFF
Accused of piracy, video site counters copyright complaints
With the money from CDs and digital downloads disappearing, the music industry has pinned its hopes on online song streaming, which now accounts for most of the $7.7-billion U.S. music market.
But the biggest player isn’t a name most associated with streaming — Spotify, Amazon, Pandora or Apple. It’s YouTube, the site best known for viral videos, which accounts for 25 per cent of all music streamed worldwide, far more than any other site.
YouTube is locked in an increasingly bitter battle with music labels over how much it pays to stream their songs — and at stake is not just the finances of the music industry but also the way that millions of people around the world have grown accustomed to listening to music: for free.
Music labels accuse YouTube of using a legal loophole to pay less for songs than traditional musicstreaming sites, calling it the biggest threat since song piracy crippled the industry in the early 2000s. The industry has pressed its case to regulators around the world in hopes of forcing a change.
“I do think YouTube is starting to panic a little bit,” said Mitch Glazier, president of the Recording Industry Association of America.
But YouTube is not backing down, stressing the benefits to musicians of promotion on one of the Web’s most popular sites — which allows ordinary users to integrate music into their uploads. YouTube also warns against attacks that could reduce competition among streaming services.
“The industry should be really, really careful because they could close their eyes and wake up with their revenue really concentrated in two, three sources,” said Lyor Cohen, YouTube’s global head of music, referring to Spotify, Apple Music and Amazon Prime Music. The music industry counters it is backed into a corner when negotiating with YouTube, which federal law mostly shields from responsibility for what users post on the site.
“It isn’t a level playing field,” said one executive at a major music label who spoke on the condition of anonymity, “because ultimately you’re negotiating with a party who is going to have your content no matter what.”
The battle is heating up as the European Union is expected to release new rules this year for how services such as YouTube pay for music, potentially upending some of the copyright protections that undergird the internet.
The EU has formally recognized there is a “value gap” between song royalties and what user-upload services such as YouTube earn from selling ads while playing music. YouTube is by far the largest user-upload site.
Even the value gap’s existence is disputed. A recent economic study commissioned by YouTube found no value gap — the report said YouTube promotes the music industry, and if YouTube stopped playing music, 85 per cent of users would flock to services that offered lower or no royalties.
A different study by an independent consulting group pegged the YouTube value gap at more than $650 million in the U.S. alone.
The dispute boils down to what YouTube pays for songs.
Musicians from Arcade Fire to Garth Brooks to Pharrell Williams say they earn less when their songs are played on YouTube than on a site such as Spotify.
YouTube pays an estimated $1 per 1,000 plays on average, while Spotify and Apple music pay a rate closer to $7.
Irving Azoff, the legendary manager for such acts as the Eagles and Christina Aguilera, said he has one artist — whom he declined to name — who gets 33 per cent of her online streams from YouTube but only 10 per cent of her streaming revenue.
Smaller acts see it, too. Zoe Keating, an instrumental cello player, showed The Washington Post a statement from YouTube showing she earned $261 from 1.42 million views on YouTube. In comparison, she earned $940 from 230,000 streams on Spotify.
The music industry claims YouTube has avoided paying a fair-market rate by hiding behind broad legal protections. In the United States, that’s the “safe harbour” provision, which essentially says YouTube is not to blame if someone uploads a copy-protected song — unless the copyright holder complains.
This, the music industry argues, leads to a costly game of hide and seek: hunting for illicit song uploads and filing notices with YouTube.
YouTube says it has the solution: Its Content ID system automatically checks for violations by comparing songs detected in new uploads against a database of claimed songs, capturing 98 per cent of complaints. The company says it averages fewer than 1,500 traditional copyright claims from the music industry a week.