Well, what a weekend. The most-hyped fight in a generation: Mayweather vs McGregor. The underdog put up a good fight, with the will of the people behind him, but in the end, the seasoned pro won the day, hiding behind his gloves and landing the blows he knew would matter.
But whilst that fight is done, a more important brawl is brewing, albeit it with less fanfare, fewer memes and fewer shouty Irishmen. In the red corner… YouTube, backed by the richest company on the planet – Alphabet. In the blue corner… The Music Business and, well, virtually anyone who wants to make a living from music.
The build-up to this fight has been going on for years now and heated up earlier this year when a number of A-list artists, led by legendary producer T Bone Burnett, called on Congress to amend the DMCA. Artists such as Katy Perry, Nile Rodgers and Lionel Richie have railed against the piece of copyright legislation, introduced in 2000 (4 years before YouTube was born), that allows sites like YouTube to earn money from copyrighted content illegally uploaded to their site.
The trouble for the music industry is that YouTube has no reason to get in the ring. This is a fight they don’t need to have. But, with industry heavyweights lining up opposite them, YouTube have sent someone to try and deflect the punches.
Last week, YouTube’s global Head of Music, Lyor Cohen, used a blog post to address “the disconnect between YouTube and the rest of the industry”. He professed that, despite being “late to the party“, YouTube are very serious about their commitment to subscription services and turning their users into paying subscribers.
He also argues that advertising revenue has already given billions to the music industry and that will only increase with time. Citing the industry’s initial scepticism about iTunes and Spotify, Cohen insist that “the growth that the industry is seeing today proves that ads and subscription thrive side by side.”
Well the industry has, unsurprisingly, responded to Cohen’s proclamation. Cary Sherman, Chairman & CEO of the RIAA, wrote an article on Medium that calls out some of Lyor Cohen’s claims. He is understandably irked by Cohen’s claim that “focus on copyright safe harbors is a distraction“, mainly because it is the centrepiece of YouTube’s business model. It is the protection of ‘safe harbor’ that gives YouTube an indisputable advantage over other music platforms like Spotify and Apple Music, that have to pay the copyright of every song in their catalogue.
But, contrary to the picture often painted by Google/YouTube, Sherman believes safe harbours should be preserved in the right circumstances: “But if safe harbors are to drive innovation and fair competition in today’s digital environment, they must be applied as originally intended, not as they are exploited by YouTube for its own competitive advantage.”
In Cohen’s mind, transparency is the main issue for YouTube, with artists confused about how much they are actually earning from adverts compared to subscriptions. YouTube pays over $3 per 1000 streams in the U.S which, according to Cohen, is “more than other ad supported services.” However, according to Sherman, this is an exaggerated figure. YouTube actually pay seven times less than Spotify – a service which also has both subscription and ad-driven models.
Seemingly, this is a debate that will go on until the big labels put their foot down completely and disrupt YouTube’s business model to the point where they start taking things seriously. Earlier this year, Warner Music signed a new deal with YouTube under “very difficult circumstances“. The label made it clear that the deal was signed because it felt it had to, not because it wanted to. CEO Steve Cooper said in a memo “There’s no getting around the fact that, even if YouTube doesn’t have licenses, our music will still be available but not monetized at all.”
In June, Beggars Chairman Martin Mills, penned an article in Music Business Worldwide addressing concerns about safe harbours from an indie labels’s perspective: “The problem remains simple – services such as YouTube have our music, whether we choose to license them or not. And if we don’t, we don’t get access to content management tools, so we have to endure an unlicensed uncontrollable free-for-all.”
Mills also noted his scepticism of YouTube’s many attempts to draw parallels between them and other media platforms: “They say they’re like radio, but of course they’re not at all, because they’re on-demand. They say they bring users into the licensed eco-system, but at such a paltry return that they might as well be in the pirate world.”
According to Mills, many Beggars artists make more than half their income from audio streaming services like Spotify but less than 2% of their income comes from video streaming platforms like YouTube, which have far more users.
Ultimately, the figures speak for themselves. 82% of YouTube visitors use it to listen to music while 9/10 of the most viewed videos on the platform are music videos. Whilst it may well have paid billions of dollars to the industry, their persistent lack of transparency and their tendency to hide behind carefully constructed statements means YouTube are a long way from being the “better partner” that Sherman and the rest of the music industry believe they could be. And with Facebook reportedly preparing to make forays into the music video business, YouTube’s complacency could be their undoing.
If things are to change then perhaps the music industry will have to learn from McGregor’s defeat: continually landing jabs is all good and well, but without real force and commitment behind them, you’re destined to scrap yourself into exhaustion.