YouTube is sparring with a handful of independent record labels over licensing deals regarding the Google-owned video site’s forthcoming subscription service, the side effect of which will see a handful of indie artists’ music removed from YouTube imminently. Up until yesterday, when this news made the rounds in sensationalized form on tech blogs, there had been relatively little discussion of an issue that might have a dramatic effect on both labels and consumers. So what’s going on?
What little conversation surrounding these negotiations there was before yesterday had been widely relegated to British papers like The Guardian and trade publications like Billboard . This could be because those speaking up the loudest are UK-based musicians like Radiohead and Billy Bragg and industry figures like Alison Wenham — the latter serves as the CEO of the Worldwide Independent Network (WIN), a global organization representing the indie music community, and led the charge on filing an investigation request with the European Commission. But these battles are not relegated to Europe, with the American Association of Independent Music (A2IM) recently filing a claim with the Federal Trade Commission regarding YouTube’s business practices with indie labels.
With rumors surrounding the negotiations now making (misleading) headlines, there’s every reason for American music fans to understand what this actually means. No, not every independent artist is being pulled off YouTube.
What’s the deal?
YouTube has plans to launch a paid subscription service later this year, which will provide an ad-free experience for watching videos and listening to music, as well as the ability to download songs on devices. In order to achieve this last bit — which aims to rival Spotify, Beats Music, etc. — YouTube needs to negotiate new royalty agreements with record labels, with whom it already has revenue share deals for streaming video and audio.
The three major labels — Universal Music Group, Sony Music Entertainment, and Warner Music — have all inked new licensing deals for YouTube’s service, which does not currently have a launch date but is expected to be tested within Google imminently. According to The Guardian, WIN claims that YouTube has asked independent labels to sign deals with less lucrative terms than the majors, or have their videos blocked. Through their digital distributors, the majority of independent labels have agreed to YouTube’s terms (95 percent, according to YouTube). But a few of what they call the “major” indies — Beggars Group and Domino Records — reportedly have not, in some form or another.
The news of a YouTube ban on artists from the uncooperative labels happening “in a matter of days” originated from YouTube’s head of content and business operations, Robert Kyncl, in a recent Financial Times interview. An unnamed source close to YouTube told Billboard that “the dispute with the indies is not likely to hold up [YouTube’s] plans.” The labels and YouTube could come to a resolution this week, for all we know, and consumers will never know the difference. But if not, YouTube has confirmed that in various countries, they will indeed block content from the labels who have not agreed to their terms.
Which artists are banned?
This is where it gets interesting. “We’re not confirming which [labels] this affects as we’re still in negotiations with them,” YouTube spokesperson Matt McLernon told Flavorwire. “However, here are some indies [labels and digital distributors] that have signed with YouTube and are open to having their names shared: The Orchard/IODA, Believe, Toolroom, Kontor Records/Kontor New Media, Made in Etaly, T-Series, YG Entertainment, SM Entertainment, Farolatino, OneRPM, Spinnin Records, Ultra Records, and many more.”
The two labels named in every single article on the subject thus far as being potentially subject to a ban are Beggars Group — whose suite of indies includes XL, Matador, Rough Trade, 4AD, and Young Turks — and Domino. We reached out to both labels for comment; Beggars told us they had no comment, and Domino did not respond. But the thing is, this ban may very well not even apply to an entire label or label group. It could be a handful of big-name artists who feel the “indie” deal is below them. These labels are currently in contract with YouTube, so it’s not like they can come right out and confirm the details here.
Anyway, some artists who are signed to Beggars labels currently in America, if conjecture is your thing: Adele*, Radiohead, Vampire Weekend, Queens of the Stone Age, Grimes, The National, The xx, Atoms for Peace, Sigur Rós
* (A co-deal with Columbia, a Sony label, so who knows if this applies)
And Domino in the US: Arctic Monkeys, Animal Collective, The Kills, Dirty Projectors, Blood Orange, Hot Chip
It’s worth noting that earlier this year, Beggars and Domino — along with their partners in the Independent Distribution Cooperative (Merge, Saddle Creek, Secretly Canadian) — negotiated groundbreaking new terms with their major-label-owned distributor, ADA, for each label to retain their own digital rights. Beggars head Martin Mills has not been shy about his demands for better revenue deals from streaming services, either.
Wait, so I can’t watch “Rolling In the Deep” on YouTube?
Yes, you should be able to watch “Rolling in the Deep” on YouTube, even if the ban applies to Adele. You know those artist Vevo accounts on YouTube? Those will still exist!
“To clarify, music videos from the indie labels and distributed by Vevo on YouTube will not be taken down,” a Vevo spokesperson told TechCrunch.
What does the music industry think?
Varying degrees of outrage, ranging from ‘blown out of proportion’ to ‘grave error.’ While it certainly isn’t fair that YouTube would offer indie labels less money than the majors, the majority of indies have agreed to YouTube’s latest terms anyway, either individually or through their digital distributors. It’s just another example of how independent labels, despite releasing some of the most innovative music of our times, have been made to feel like second-class citizens in the wider music industry.
Here are few industry opinions Flavorwire solicited:
YouTube’s statement: “Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry. We’re adding subscription-based features for music on YouTube with this in mind — to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year. We are excited that hundreds of major and independent labels are already partnering with us.”
Alison Wenham, CEO of WIN: “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. 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. 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.”
Ian Wheeler, Co-Founder of Partisan Records: “This isn’t fair… period. YouTube has long been and continues to be an extremely valuable music discovery tool — both for music fans and for artists. Hell, I know quite a few artists who have educated themselves in innumerable ways using YouTube. It’s a shame to hear that corporate greed and marketshare could be putting an end to this. Further, independent labels have long been a major ally of YouTube — we’ve used YouTube since day one and have been extremely grateful for their efforts to monetize users’ content on their site, putting money back in the hands of artists and labels. Music videos cost money to make. YouTube has been great about paying artists and labels for their content to date, so this move feels like a complete 180, and those of us on the artist/label side are scratching our heads.”
Hannah Silk Champagne, Project Manager at Captured Tracks: “As how it effects independent artists, in my opinion that sort of depends on what we’re defining as “independent.’ In the press they’ve mentioned Adele, Arctic Monkeys, and Jack White [who’s signed to XL in the UK], who are all — with major technicalities — on ‘independent’ labels. Frankly I question if their digital distribution is actually done through these labels or if it’s done through their major label partners [like Adele and XL’s American deal with Columbia]. However, if it is through an indie that is being blocked, it could financially affect them in a pretty big way, as their view counts probably add up to some serious streaming revenue. Exposure-wise, it is doubtful that those artists will be affected all by the YouTube ban.
“I think it’s a little harder to say when it comes to artists on the level of DIIV or Mac DeMarco, both on Captured Tracks. While Mac and DIIV do see revenue from streaming sites like YouTube, I don’t believe it’s very significant and YouTube pays one of the lowest percentages for streaming. Soundcloud, even though it doesn’t monetize, generates way more exposure for smaller artists and smaller labels, although a lot of labels — thinking of Beggars labels in particular — don’t use Soundcloud anymore.”
Leo DeLuca, Label Manager at Misra Records: “I personally don’t believe this is fair and it is not aligned with concept of net neutrality. This gives preference to the ‘haves’ and puts the ‘have-nots’ on the backburner. A free market must allow for everyone to freely bring forth their ideas, music, songs to the masses. YouTube is putting independent artists and labels at a disadvantage. In turn, I do think they will feel the backlash of this decision.”