No. 16

October 01, 2014

YouTube is launching a paid subscription streaming music service to compete with Spotify and Pandora later this summer. It will be integrated with the free, ad-supported YouTube users are used to, but with added features available to paying subscribers. In preparation for the launch, the Google-owned platform has signed agreements with almost every label they currently work with — 95 percent. The three major record labels — Universal, Sony and Warner — have signed up, as well as hundreds of independent and developing labels, but 5 percent are holding out for a better deal.

Independent label advocates say the terms of the deals offered to some labels are unfair compared to the deals offered to big labels. YouTube said they were fair. The paid service will pay all artists and rights owners the same amount each time someone streams their song. Currently, ad-supported videos pay different amounts to rights owners depending on how popular the song is or how much advertisers want to pay to have their ad run before it. YouTube has confirmed that certain videos will be removed from the site — not just the YouTube paid service — very soon. The content that will be blocked is official content that comes from the artist or the label — like an official recording of a live performance — and only if the label has not signed onto the deal. Notably, any music video currently available on Vevo — even from artists whose labels are holding out — will stay on YouTube

Any user-uploaded video of copyrighted content will likely stay up too, though it’s yet to be finalized. The videos will not be monetized, which means that videos that stay up will not have ads running on them or earn money, or videos might be taken down. Currently, rights holders can monetize user-uploaded videos of their copyrighted content through YouTube’s ContentID system, which alerts rights owners of copyrighted content on the site and lets them choose to take it down or get revenue from ads that run in front of it.

The American Association of Independent music said in a letter to the FTC that “According to our members, the terms currently on offer to Independent companies from YouTube are non-negotiable and highly unfavorable, and in many cases, unworkable (for example insisting on global rights which the Independent may not be able to grant). They also undermine existing rates in the marketplace from music streaming partners such as Spotify, Rdio, Rhapsody and others.”

It has yet to be seen what will transpire here with YouTube and their upcoming paid subscription service. Hopefully more details will be released in the coming months. If YouTube is allowed to undermine the competition between places like Spotify, Pandora, Rhapsody, etc. they would have the upperhand in profiting more and paying out less to the artist. One must wonder if this new service, and its policies, will be the precursor to stricter use of copywritten material with stronger action in the removal of infringing material and pirated content. While YouTube is a sess pool of pirated content, it does have its merits in worldwide reach for those who are promoting their own business. One must hope that the deals being made by the major labels don't lead to their monopolization, therefore taking the promotional value of YouTube away from unsigned bands and independant labels promoting themselves for free.

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