YouTube is the latest in a long line of platforms accused of treating indie labels like second-class citizens. But will that be the video giant’s downfall?
YouTube's plans are controversial, but they don't involve banning any indies outright.
It's important to note that removing the labels from YouTube's ad program, or "Partner Program," isn't the same as blocking them from YouTube altogether, as some outlets have reported. And a source familiar with YouTube's operations told BuzzFeed that holdouts from the service, which is currently scheduled to launch in the "coming months," not days, would still be able to use YouTube's Content ID to stop unauthorized users from posting their copyrighted content. That source also said among the labels currently participating in the Partner Program, there are now fewer than 100 holdouts.
In a statement, a spokesman for YouTube said: "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. We're adding subscription-based features for music on YouTube with this in mind — to bring our music partners 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."
Bathetic Records
For indies, getting the short end of the stick with streaming is sadly nothing new.
The major labels — Universal Music Group, Sony Music Entertainment, and Warner Music Group — haven't had any bad things to say about YouTube's new subscription service. Sources said that's because they received a better set of terms for licensing their music. Thanks to blockbuster albums from big names like Beyoncé and Justin Timberlake, the majors held the copyrights to about 65% of the music sold in America at last count, according to Nielsen. And because they own distribution companies that deliver independent music to retail stores and digital service providers, they can sometimes claim control of an even greater percentage. When a new music service launches, appeasing the majors is usually seen as the cost of doing business.
On a basic level, that makes indies a disadvantaged minority. In 2008, News Corp. did something similar to what YouTube is doing now with the launch of the now-defunct MySpace Music. MySpace offered equity in the service and special payouts to major labels but not the independents. The indies abstained... and MySpace Music eventually fizzled. But since then, other services have stuck to this approach: Beats predecessor MOG, Samsung's Milk Music, Sony Music Unlimited, Songl (Australia), iTunes Radio, Amazon Prime Music, and now YouTube — all have reportedly given preferential deals to the majors and offered indies sloppy seconds.
"A lot of times these companies come from the tech sector and they know music is important, but they're not really interested in digging into the details," said Charles Caldas, president of Merlin, an international association that lobbies on behalf of thousands of independent labels with new digital services, including YouTube. "Usually they're selling something else and music just ticks a box for them."
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