A few years ago, the biggest enemy of the music industry was Pandora Media. Then Spotify became the target.
Now it is YouTube’s turn.
In recent months, the music world has been united to a rare degree in a public fight against YouTube, accusing the service of paying too little in royalties and asking for changes to the law that allows the company to operate the way it does. The battle highlights the need to capture every dollar as listeners’ habits turn to streaming, as well as the industry’s complicated relationship with YouTube.
The dispute has played out in a drumbeat of industry reports, blog posts and opinion columns. Stars such as Katy Perry, Pharrell Williams and Billy Joel have signed letters asking for changes to copyright laws. Irving Azoff, the manager of artists including the Eagles and Christina Aguilera, criticized YouTube in an interview and in a fiery speech around the Grammy Awards.
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Also, annual sales statistics were released showing that YouTube, despite its gigantic audience, produces less direct income for musicians than the niche market of vinyl record sales.
“This is the result of an explosion of views of music videos on YouTube against a backdrop of decline in the recorded music business in general,” Larry Miller, an associate professor of music business at New York University’s Steinhardt School, said of the fight.
With more than 1 billion users, including the youngest and most engaged music fans, YouTube has long been seen by the music business as a vital way to promote songs and hunt for the next star. At the same time, music executives grumble that it has never been a substantial source of revenue and is a vexing outlet for leaks and unauthorized material.
It may not be a coincidence that the major record labels are also in the midst of renegotiating their licensing contracts with YouTube this year.
In its newest effort, the music industry has asked the federal government to change the Digital Millennium Copyright Act, saying that the law, known as DMCA – which was passed in 1998 and protects sites such as YouTube that host copyrighted material posted by users – is outdated and makes removing unauthorized content too difficult.
Cary Sherman, the chief executive of the Recording Industry Association of America, says that even when songs are taken down, they can easily be uploaded again.
“This is a new form of piracy,” he said. “You don’t have to go into dark corners and sell stuff out of your car. You can do it in plain sight and rely on the DMCA to justify that what you’re doing is perfectly legal.”
Europe’s copyright protections are also under review, and last month, Andrus Ansip, the European Commission’s digital chief, called on YouTube to pay more for its content. But so far, YouTube does not seem shaken.
In an interview, Robert Kyncl, YouTube’s chief business officer, said that since its inception in 2005, YouTube has paid $3 billion to the music industry around the world. (In earlier statements, YouTube has said that Google, its parent company, paid that amount across all of its sites, but Kyncl now says that YouTube alone has contributed that sum and that other Google services have added even more.)
“Music matters tremendously to us,” Kyncl said. “Artists matter to us. We are connecting artists and fans on our platforms.”
He also pointed to the site’s new subscription plan, YouTube Red, and said YouTube’s copyright protections were functioning as they should. Content ID, the site’s proprietary system, lets copyright owners keep track of their material, and when the system detects a new video including a tracked song – whether in a full music video or just the background of a user-uploaded clip – the owner can choose to keep the video online or take it down.
According to YouTube, 98 percent of copyright claims on its system are made through Content ID, and 99.5 percent of the claims related to music are handled automatically. YouTube says about half the money it pays in music royalties is related to user-generated videos that incorporate music processed through Content ID.
“We are working to create what has become the most significant revenue generator in the entertainment industry,” Kyncl said, “which is a dual revenue stream where you monetize all people: heavy users through subscription, and light users through advertising.”
Touched a nerve
But the music industry argues that YouTube’s financial contributions have not kept pace with the popularity of its streams. In March, the recording industry association’s annual report of sales statistics, usually a dry financial summary, criticized YouTube harshly. It said that free ad-supported sites like it, which let users pick specific songs on demand, paid $385 million to record labels in the United States – less than the $416 million collected from the sale of just 17 million vinyl records.
Spotify paid about $1.8 billion last year for music licensing and related costs, according to the company’s annual returns, although the average royalty rates for its free tier are not much different from YouTube’s, by some estimates.
The fight over the Digital Millennium Copyright Act has touched a nerve. The music industry is bracing for what may be a high-wattage lobbying battle reminiscent of the one over the Stop Online Piracy Act, a bill that was abandoned in 2012 after opposition from technology activists and internet giants like Google and Wikipedia.
In December, the U.S. Copyright Office asked for comments about DMCA as part of a review of the law, and filings by record companies show how laborious copyright policing can be. Universal Music said that after Taylor Swift’s album “1989” was released in late 2014, the company devoted a team of employees full time to search for unauthorized copies; to date, the company said, it has sent 66,000 takedown notices to various sites about “1989,” in addition to 114,000 blocks on YouTube made automatically through Content ID.
YouTube says that about 8,000 companies and organizations have access to Content ID and that independents may get access through affiliated companies and industry groups. Kyncl said the steps in the takedown process were meant to ensure the accuracy of requests and deter false claims.