June 25, 2014

Will YouTube's New Music Service Squash Indie Artists?


There have been dozens of articles written over the past week about the new YouTube service, Music Pass, though it won't be available publicly for months. Some clickbait headlines seem to be furiously frothing at the mouth, while others are entirely dismissive. In the interest of gathering the best information, I took that bait and read most of them. Here is what I can boil down, followed by some unanswered questions.

Music Pass will be a subscription-based music platform. Much like Spotify, users will be able to stream or download music within the application. Also reminiscent of Spotify, major labels have been invited to the negotiating table first, and independent artists and labels are being given second-class treatment.

It's true that a lot of available information comes from anonymous sources familiar with the agreement. It has to, because YouTube is being tight-lipped, even in this media storm. Other details are based on a press release by Worldwide Independent Network (WIN), which represents some of the labels refusing to sign the agreement.

Currently, there are a couple of ways for artists to get paid through YouTube. Content made available through a digital distributor (such as IODA) receive 60 percent of the money generated through ad placement. If someone else uploads that content, YouTube may tag it as copyrighted material and monetize it anyway, sending that percentage to the rights holder. Regular user-generated content receives 55 percent. 

The terms of the Music Pass agreement are not public, but the three majors (Universal, Sony and Warner) have reportedly already negotiated their rates. Independent labels and artists, representing roughly 30 percent of the music content on YouTube, have been offered a lower rate—take it or leave it. About 20 percent of those artists and labels—the ones working with IODA and other digital distributors—have already agreed to lower rates. The rest are holding out because of the rate discrepancy. YouTube has offered no negotiation.

According to the Financial Times' interview with YouTube's Global Head of Content and Business Operations Robert Kyncl, YouTube will begin blocking videos by non-compliant artists “in a matter of days.” Many commenters on Reddit and other sites have doubted this claim, saying the company would be foolish to block thousands of videos on the free service. 

But Billboard says, "YouTube executives argue that they cannot offer music on the free service without it also being available on the paid service, as this would disappoint its subscribers."

Another article, by Ari Herstand of Digital Music News, also uses a "source very familiar with YouTube Music’s streaming partner agreement, who would like to remain anonymous." The source thinks it's unlikely that YouTube would outright block videos—just the monetization of videos that don't go through the proper distribution channels as governed by the new agreement. 

Herstand writes, "You really think that every video that contains music is going to be ripped down if that song has not been submitted to YouTube’s new music streaming service? That would be a nightmare for YouTube. With lots of room for error."

I think Herstand is being overly optimistic. YouTube has proven to have plenty of tolerance for error, even showing itself to be absolutely sloppy in its handling of copyright. The music fingerprint database Rumblefish has blocked YouTube content because it claimed copyright on bird sounds in the background of a user's home video that came from a nature recording released through CD Baby. 

Likewise, I have had my own music videos flagged for copyright violations when no licensed content other than my own work was used. A Google search shows this to be a frequent occurrence. The process to overturn the flag and restore the monetization is a long, hard road. Why would blocking videos be any less likely to occur, and with the same frequency?

Will YouTube start removing videos by independent artists? Will it only remove content by independent artists popular enough to be on its radar, or will any content with a fingerprint be tagged and removed? What if a user uploads that material? Will YouTube use its fingerprint database to ID the content and block it, or just deny it monetization? The former would be an unpopular move. The latter would equate to piracy.

Clearly, no one actually knows what YouTube's intentions truly are, but if what they tell us is true, we should see results soon.