Digital Top Stories

Songs man raises royalty issues over booming MCNs on YouTube

By | Published on Thursday 21 March 2013

Matt Pincus

The boss of US-based independent music publisher Songs Music Publishing, Matt Pincus, has raised another concern about the way publishing royalties are paid, or not, on YouTube content in North America, having previously criticised the way song rights are handled by VEVO’s operations on the Google-owned video platform. The concern this time is with so called ‘multi-channel networks’.

In the UK, all of YouTube’s output is, in theory at least, covered – as far as the copyrights in lyrics and musical compositions are concerned – by one licence from collecting society PRS For Music. This means the owners of publishing rights earn royalties whenever their content is used, whether in official pop promos or synced into videos uploaded by third parties and bedroom content makers (subject to the usual limitations of tracking such usage).

But in the US it is more complicated. The ‘performance right’ is collected by the collecting societies, but a second ‘synchronisation right’ is not, meaning music publishers also need to have direct deals with YouTube to collect all the royalties they are due for the use of their songs.

The majors, of course, have close relationships with YouTube on both the sound recording and publishing sides, and last year a deal between the Google-owned video site and the National Music Publisher’s Association was struck enabling indie publishers to also collect all of their royalties when songs they own are synced in user-generated videos. So, all a bit complicated, but in theory that’s everything sorted.

Except that, it turns out, content on YouTube managed by so called multi-channel networks is outside that arrangement. MCNs are businesses that have quietly emerged in recent years to capitalise on the small community of YouTube ‘vloggers’ and mini-programme makers that have scored themselves significant and sometimes massive online audiences via the Google video platform.

MCNs enter into formal alliances with the creators of this YouTube-only content (many of whom are one-man operations) and, exploiting a special partnership they have also struck up with Google, help the affiliated independent content makers better market and monetise their content, in return for a cut of the action. Which is a sound business idea, and some of these so called MCNs are sizable concerns with serious financial backing and some high profile media execs on their staff.

Many in the music industry first became aware of these companies’ existence last month when Universal Music Publishing announced it had entered into licensing deals with two of the biggest MCNs, Maker Studios and Fullscreen Media. Why was such a deal needed? Because in the US the MCNs sit outside existing YouTube agreements when it comes to music rights. So, what about the flippin indies?

“There are currently billions of streams of music being watched by millions of people on YouTube, for which songwriters and their music publishers are receiving no money”, notes Pincus in a Billbaord op-ed on the issue. “With backing from Google, Silicon Valley venture capital firms or large media companies, MCNs are distributing hundreds of hours of music-related content and selling tens of millions of dollars of advertising, with almost none of it going to songwriters and music publishers”.

It’s not clear why the MCNs are excluded from YouTube’s music rights deals, though it may be because the MCN companies reckon they can negotiate better deals from labels and publishers, presumably by arguing that – unlike when someone syncs a track to footage of a friend falling off a skateboard – the sort of videos these networks represent have more substance, therefore the music is a less significant part of the mix, therefore we’ll give you less of the ad money the video generates thank you very much.

Pincus also notes that, because the MCNs sit outside the other YouTube arrangements, not only do indie publishers not earn all the royalties they are due, but it’s harder to monitor what content is being used, because the opt-out also means content distributed by the MCN businesses isn’t flagged in YouTube’s content management system which many rights owners now rely on to manage the use of their content on videos across the platform.

Of course if and when a publisher finds its songs being used in an MCN-distributed video it could issue a takedown notice to Google, which would – it’s assumed – act upon it. But that requires the publisher to spot the usage manually, plus many publishers would rather get a share of ad revenue than be seen as the big bad rights owner who’s stopping the kids from enjoying one of their favourite videos via a DMCA claim.

While noting the Universal deal, Pincus says the MCNs, in the main, have not made any effort to sort out music licensing, despite the content industry veterans some of them employ (making it impossible for such firms to plead ignorance). “Maker Studios signed a deal with only one major music publisher two weeks ago”, the SONGS chief writes, “[and] it has been in business for over four years, building huge audiences streaming a capella videos”.

He continues: “Fullscreen Media, another leading MCN, has agreements with only two of the majors. Neither MCN has licensed more than a handful of independent publishers, and the terms of their agreements with majors have not been extended to the trade. Both companies should do so immediately and NMPA will be enforcing its rights to make sure that they do”.

Concluding, Pincus writes: “If a six year old kid sings a song and puts it on YouTube, the writer gets paid. If she’s any good and actually obtains an audience, an MCN like Maker Studios – with $35 million in VC funding from Time Warner, the Murdoch family and others – will sign her. Then, the money stops flowing to the writer, whether the video stops streaming or not”.

Although the concerns raised by Pincus relate specifically to North America, the trend will also impact on UK indie publishers, because of the fact not all YouTube royalties in the US are collected through the collecting societies like BMI and ASCAP. The direct PRS deal with YouTube only covers videos watched in the UK, while PRS members whose content is watched in third party videos in the US will only receive any royalties collected by the American societies. To get all the cash they are due direct deals would be necessary, with YouTube for one, but – as Pincus has revealed – with every MCN too.

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