It's been more than six months since we revealed changes in the code of the YouTube Android app that indicated the long-rumored YouTube streaming service was imminent. So what's the holdup? A rocky relationship between YouTube and independent music publishers may be to blame. Late last week the Worldwide Independent Network, a trade organization for indie musicians and labels, issued a press release decrying Google's treatment of independent labels.
The press release explicitly states that YouTube has approached labels both big and small with contracts for a new music service... and that the terms being offered to independents, or at least those represented by WIN, are unfair. Compensation is reportedly far below what's currently being offered by rival services like Rdio and Spotify, and the terms are non-negotiable. Furthermore, the release says that turning down the YouTube music service contract means that music from the relevant artists will be "blocked on the platform." Anonymous sources "with direct knowledge" of the negotiations tell the New York Times that refusing YouTube's terms may mean that labels won't be able to collect revenues from user uploads that include their music, a considerable source of secondary income.
The WIN press release includes some damning quotes from executives at independent labels and trade organizations:
It is unfortunate that a service like YouTube with a worldwide scope appears not to be interested in treating all copyright owner creators equally. This has an effect not just on A2IM’s label members but also upon their artists and the consumer fans of our artists who will lose this form of access to our music. We hope that we can continue discussions with YouTube and ultimately restore and grow our relationship with this very important service.
Rich Bengloff, President -American Association of Independent Music (A2IM)
The independent sector has struggled for decades to have a fair market in which to work. There is no reason for us to, at this point, give to one player privileges that could jeopardize the market health as a whole. This pressure over the labels is insane and will lead nowhere, but to a delay in service launch.
Luciana Pegorer - Managing Director ABMI, Brazil
We are extremely disappointed at YouTube’s decision to use its market power to unilaterally enforce inferior commercial terms on the independent sector. For a company that has arranged its structure to pay minimal tax in our market, to now see YouTube’s treatment of independent Australian labels who provide so much of its Australian music content so as to further improve their profitability at the sake of local content creators is deeply concerning.
David Vodicka – AIR, Australia
Contracts with the big guns of the music industry like Sony, Universal, and Warner are already in place. It's not clear if they've been given the same terms as the non-negotiable contracts offered to smaller labels, but it's safe to assume that these bigger powers would have more room to deal. Neither YouTube nor Google are commenting on any of it.
It wouldn't be impossible to launch a new music service without indie labels, but doing so would put "YouTube Music" at a crippling disadvantage to its competitors. It's hard to say who's at fault with any certainty without seeing the terms, but WIN's press release says that its talks with YouTube last week went nowhere. We may be waiting on this one for quite a while.
London, May 22nd 2014 – The Worldwide Independent Network (WIN), the organisation that represents the interests of the global independent music community has responded to news that YouTube intends to block the content of members who do not sign a new music streaming agreement describing it as ‘unnecessary and indefensible’
WIN was formed in 2006 to represent the global independent industry, which boasts the second largest global market share after Universal.
As reported by several news sources:
(http://www.hypebot.com/hypebot/2014/04/YouTube-music-subscription-music-service-to-launch-this-summer-report-.html) YouTube is expected to launch a new music streaming service. The service has apparently negotiated separate agreements with the three major labels – Sony, Warner and Universal – but according to WIN’s trade association colleagues has yet to reach any substantive agreement with their members.
At a time when independent music companies are increasing their global market share WIN has raised major concerns about YouTube’s recent policy of approaching independent labels directly with a template contract and an explicit threat that their content will be blocked on the platform if it is not signed.
According to WIN members, the contractscurrently on offer to independent labels from YouTube are on highly unfavourable, and non-negotiable terms, and undervalue existing rates in the marketplace from existing music streaming partners such as Spotify, Rdio, Deezerand others.
WIN has held extensive talks with YouTube at their instigation over the last 24 hours to try and resolve this issue but no progress has been made. WIN’s request for YouTube to rescind the termination letters sent to its members has not as yet been agreed to.
Alison Wenham, CEO of WIN and Chairman of AIM (Association of Independent Music, UK)said, “Our members are small businesses who rely on a variety of income streams to invest in new talent. They are being told by one of thelargest companies in the world to accept terms that are out of step with the marketplace for streaming. This is not a fair way to do business.WIN questions any actions by any organization that would seek to injure and punish innocent labels and musicians — and their innocent fans— in order to pursue its ambitions. We believe, as such, that these actions are unnecessary and indefensible, not to mention commercially questionable and potentially damaging to YouTube itself, given the harm likely to result from this approach. The international independent music trade associations call uponYouTube on behalf of their members to work with them towards an agreement that is fair and equitable for all independent labels. This has uncomfortable echoes of similar behaviour by MTV ten years ago, who chose initially to take a similar approach in undervaluing the independent sector, but who subsequently concluded a deal on fair terms, which lasts to this day. It is for every company to determine their own commercial arrangements, but it is in no one’s interests to see independent artists being undervalued in the digital marketplace.
Other organisations and WIN members from around the world also joined calls for YouTube to re-consider its position. Statements of support have so far been received from organisations in the following countries
- New Zealand
- South Korea