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Business News Digital Labels & Publishers
CMU says: Is it Google’s business model that’s just not right for videos?
By Chris Cooke | Published on Thursday 2 April 2009
Assuming Google do withdraw their bigger name artist videos from their German service, like they have in the UK, it would be interesting to know what the web firm’s strategy is.
Is the video ban a negotiating tactic to put public and/or industry pressure onto the publishing collecting societies to agree to Google’s terms – after all, those record companies with deals in place with YouTube, which includes Universal, Sony and EMI, lose out on ad revenue shares when access to their videos is blocked because the copyright in the actual song is owned by a songwriter or publisher represented by PRS?
Or is it the first step in a change of strategy by the video service regarding music on YouTube? In the early days of the video sharing website, as it negotiated its original deals with the record companies and collecting societies, the web company boldly stated it wanted to be the “biggest video jukebox in the world”.
For owners Google such an aim takes them into a new territory – the web giant is a digital service provider, not a digital content provider, and the two things are not the same thing, which is the real reason Google’s advertising model doesn’t add up when it comes to properly licensing videos (even if you account for the labels and publishers predictably pushing for higher rates than they probably should). Unless it is willing to develop a new unit based on the TV business model, where the majority of revenue goes on content costs – and now isn’t a good time to be launching such a business – it may be that Google withdraws completely from its “jukebox” mission, giving content owners a “take it or leave it” option regarding utilising its ad-funded digital services – ie free video streaming.
If that was the result of the current disputes, would PRS and GEMA have just shot themselves in the foot? Possibly, possibly not. There’s no reason why YouTube has to be the primary music video service online, and there’s an argument that putting user-generated-content next to professionally-produced content doesn’t really make sense. Though, of course, as the anti-music-biz brigade will point out, if you prevent services like YouTube from taking your content, then users will access content via the video site’s non-legit rivals who have no intention of paying an even nominal royalty fee to host said content.
Therefore, PRS and GEMA, et al, will only really benefit from standing strong against YouTube if you assume someone else can create a rival music video platform based on a proper ‘content-provision’ business model where ad revenues will get closer to covering the fees music owners want.
Who will do that? Well, those previously reported reports of Universal launching such a YouTube-powered service are very interesting, despite the major record companies’ more-or-less consistent failure to launch their own online music platforms in the past. It would make sense too for a traditional broadcaster – an MTV or 4Music – to fill this gap, again despite those companies’ frequent failure in online ventures. And of course there are entrepreneurial companies out there already trying to fill that gap – MUZU most prominently.
If web giant Google can’t do it, can we really expect those sorts of people to do it? Especially in the context of the current advertising recession? To be honest I don’t know, but I think it would be wrong to assume that, just Google are the biggest web player of the moment, theirs is the only business model worth considering in terms of providing online on-demand music video streaming services, especially given their business model wasn’t even really designed for such a thing.
