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Indie labels refusing to sign new YouTube agreement will see content pulled “in a matter of days”

By | Published on Wednesday 18 June 2014


The 60 days given to indie labels in which to sign up to YouTube’s new licensing agreement is seemingly about to expire. Which means labels who haven’t signed on the dotted line now only have “a matter of days” to do so or risk having their music videos pulled from the site, a YouTube spokesperson has told the Financial Times.

As previously reported, the global grouping for indie label trade bodies, the World Independent Network, hit out last month at what it called “unnecessary and indefensible” negotiating tactics on the part of YouTube.

Seemingly keen to hurry along the launch of its much delayed audio streaming service, the Google subsidiary sent letters to indie labels in April, informing them that failure to sign up to a new licensing agreement, which covers both the audio service and the existing video platform, would result in existing music content being purged from its system.

At a press conference earlier this month, WIN and pan-European indie labels trade body IMPALA announced their intention to take the dispute to the European Commission, arguing that YouTube’s moves were anti-competitive and a threat to many small businesses. They also requested that the EC implement emergency measures, halting the pending termination of the old YouTube licensing agreement, and also the enactment of the new one for any companies that had already signed it.

Some of the bigger indie label distributors have seemingly signed up to the new service, including The Orchard, INgrooves and Believe Digital, though usually labels distributed by such companies would still be able to opt out.

Asked for an update on the ongoing dispute, YouTube’s Head Of Content And Business Operations, Robert Kyncl, claimed to the FT yesterday that the labels joining WIN’s battle only represented 5% of the music industry.

“While we wish that we had 100% success rate”, he said. “We understand that is not likely an achievable goal and therefore it is our responsibility to our users and the industry to launch the enhanced music experience [without the hold outs]”. He added that the deal being offered would see the indie labels paid “fairly and consistently with the industry”, and that YouTube’s payouts to the music industry would hit $2 billion “soon”.

Responding, WIN said that the terms on offer are in fact “highly unfavourable and non-negotiable” and “undervalue existing rates in the marketplace from partners such as Spotify and Deezer”. Meanwhile Alison Wenham, who heads up both WIN and UK indie label group AIM, disputed the suggestion that there are only a few stragglers causing a fuss who wouldn’t be noticed if they were gone. For one thing, those stragglers include labels like Beggars Group and Domino who between them represent some major artists.

In a statement yesterday, Wenham said that indie labels who had agreed to sign the new deal are “very much in the minority”, adding: “Put simply, by refusing to engage with and listen to the concerns of the independent music sector YouTube is making a grave error of commercial judgment in misreading the market. We have tried and will continue to try to help YouTube understand just how important independent music is to any streaming service and why it should be valued accordingly”.

“Music fans want a service that offers the complete range of music available”, she continued. “This is something that companies such as Spotify and Deezer do, both of whom have excellent relationships with the independent music sector. By not giving their subscribers access to independent music YouTube is setting itself up for failure. We appreciate that a small number of independent labels may have their own reasons for agreeing to YouTube’s terms, that is their prerogative, but they are very much in the minority”.

Finally, she concluded: “The vast majority of independent labels around the world are disappointed at the lack of respect and understanding shown by YouTube. We once again urge YouTube to come and talk to us”.

Having only originally lent its support to the cause following WIN’s press conference, the BPI – which represents the majors as well as indies in the UK – was quicker to respond after this latest development, with its chief exec Geoff Taylor telling reporters yesterday: “We think it is wrong for YouTube/Google to threaten to ostracise certain independents – denying fans the opportunity to hear their music, and labels and artists the chance to earn a living from it – because they are unwilling to surrender to a take it or leave it ultimatum. As the dominant online video platform, YouTube/Google should negotiate fully and fairly with independents and not misuse its power”.

What is not clear at this stage is exactly how YouTube will enact its blockade. Presumably channels managed by dissenting labels will be disabled, though it’s not clear whether said record companies will still have access to the video platform’s Content ID system, which enables them to monitor third parties uploading their recordings, and to choose whether to block or monetise that content. If it were to take Content ID away from the indies, YouTube would lose some credibility in its bid to position itself, more to legislators than content owners, as a company that respects copyright.

Those indies who also provide videos to Vevo, which then pumps that content into YouTube through a separate deal, are likely to still appear on the video site – certainly the BBC reckons the dispute won’t affect that side of the operation. Which is potentially a way for the indies to circumvent any blockade, though they will have less control over channels, and will be giving more business to a Sony/Universal-owned entity.