More On Indie Labels And YouTube: Some Legitimate Concerns, But Still A Lot Of Misplaced Anger

from the monetization-fight dept

Last week, we wrote about how some of the stories making the rounds concerning YouTube “blocking” musicians from using YouTube and taking down videos if they didn’t agree to non-negotiable contract terms for YouTube’s new music service were… exaggerated. We pretty clearly noted within that post that there could be legitimate arguments about the terms of the contract, but the claims about being “blocked” from YouTube were not really accurate. That story got a bit of attention, as people dug in to try to understand what was going on. Various versions of the contract that YouTube has been offering to indie artists have been floating around and Digital Music News has posted a copy of the whole thing, as it’s done in the past with other music services.

I’ve also heard from a number of folks in the indie music community who have raised some good points about their concerns, going beyond the whole misleading “but they’ll block my videos.” One of the best summaries of the concerns was actually placed on a comment to our original story, which highlighted a bunch of other points that people were concerned with, some more reasonable than others. Having looked at the contract on DMN and talked this over with some folks, a few things become clear, which we’ll discuss with a few screenshots from the copy DMN uploaded (though it’s worth reading the whole thing). First, YouTube is in fact raising the rates it pays people:

As we noted, there is a little something strange about complaining about YouTube offering all its artists a deal better than the existing deal, and claiming it’s somehow unfair. And, perhaps that’s why most (between 90 and 95%) artists seem to have agreed to sign up for this deal with no problem.

The second issue is the “major label” issue. That is, it’s been reported, but not confirmed, that the major labels got nice advances from YouTube to join this program, and the indies feel that’s unfair and that they’re being cut out. As some have pointed out, some of this anger is really indies angry at the major labels plus YouTube as opposed to them just being angry at YouTube. But, on that front, it’s somewhat difficult to figure out how YouTube can really do anything here. Of course it’s going to provide greater guarantees and advances to the major labels, because they can be reasonably sure that those will make economic sense. It’s much tougher to do that with a diverse group of independent artists. There is this tidbit in the contract, though, that has raised some eyebrows:

There seems to be some fear here that the major labels will cave and agree to lower rates, and thus the indies will be locked into that. Again, this is where the “indies vs. majors” issue really comes into play. Though, again, I’m a bit hard pressed to figure out what else is makes sense for YouTube to do in this situation. The basic point here is that if the overall economics change so much that the majors are willing to accept lower streaming rates, then the indies will likely have to get pulled along as well. I can see why they’re uncomfortable with that… but at the same time it also seems like a perfectly reasonable contract term for a variety of reasons. And, at the same time, does anyone really expect that the major labels are going to agree to cut rates? That seems doubtful. They’re going to seek to increase them, rather than the other way around.

The final point that has raised some serious concerns is the apparent provision that artists need to hand over their full catalog and that it has to give their works to YouTube at the same time as any other “similarly situated” service. Here’s the clause in the contract DMN posted:

On this one, I can definitely see both sides of the argument. Some artists are willing to give some music to some services, and other music to other services, as they think will best serve their audience. At the same time, YouTube obviously has its reasons for wanting to make its service as comprehensive as possible. There is what appears to be that vague exception for “limited exclusives” to other sites, but some might not find that to be enough. As for the “entire catalog” issue, it’s important to note that the definition of “Provider Sound Recordings” and “Provider Music Videos” seems to only include those given to YouTube, so it’s not clear that it really requires artists to hand over every song they’ve ever created. It’s basically just saying that if the artist does post a song to YouTube’s monetization system, it has to be included in the program: That said, we’ve also heard that this covers ContentID. So… an artist that doesn’t want to post a video of their own song, but does want to reserve the right to monetize others’ use of his or her songs, is put in an uncomfortable position. Because by using ContentID, they’ve basically agreed to license their music to the program. That’s a point that I can see might reasonably make many artists uncomfortable. If I were in YouTube’s shoes, I’d think it might be better (at least for public perception) to offer two options here: one that is a direct monetization option, wherein the artists upload their own songs for monetization across the board, and a second one that is solely for monetizing user videos through ContentID, unrelated to the subscription music service.

Still, that’s a contractual choice that Google/YouTube is making about how it wants to run its service, and it really doesn’t seem that crazy for the company to try to put together a deal that will likely lead to the best overall experience for end users. Separately, as we pointed out last time (and at least one independent artist noted to me via email), it does seem to be looking a gift horse in the mouth a bit to basically argue that they all want to use YouTube’s platform for free — getting all the advantages of hosting, bandwidth, community, streaming software and more — and then whine about how YouTube looks to make that more sustainable while at the same time providing ways for the artists to make some revenue as well.

So, in the end, there do seem to be some reasonable concerns by artists about the specific terms in the contract — but that’s going to be true in almost any contract negotiation. YouTube’s never going to please everyone all the time. I do think YouTube could have done a few things to better anticipate some of these concerns and to provide artists with greater flexibility in some of the decisions they need to make, but looking over the key concerns, you can also make the argument that YouTube is structuring this offering to be better for users — and doing so in a way that will help artists make money. And thus… the specific complaints do feel a bit more like nitpicking. The concerns about the deals with the majors are… just kind of a fact of life. It’s hard to see how YouTube could realistically do much different in that situation. Negotiating individual deals with every single indie provider is a logistical impossibility (and, if anything, would likely require lower royalty rates, as the management of so many different deals would require significant overhead).

Once again, after looking at the details, it does seem like artists have some legitimate complaints, and YouTube could have been more open and transparent about some of the details of all of this. I definitely see the point from my artist friends who don’t want to put everything on YouTube. But, having also dealt with music services where it’s frustrating to see them missing songs that really ought to be available, you can see why the company is trying to drag some artists into accepting the fact that making more of their work available is probably best overall as well.

Filed Under: content id, contract terms, indie artists, indie labels, music, youtube
Companies: google, youtube