More Sour Notes Over YouTube, Music

The music business seems to be the nastiest place. Always fighting. Like, on Tuesday, Google said it paid the music industry $1 billion as a portion of YouTube's advertising revenue this year. Sounds great.

But the International Federation of the Phonographic Industry (IFPI) says that’s bunkum.

In an unpleasant response to what would seem like pretty pleasant news, it said: “YouTube, the world’s largest on-demand music service, is not paying artists and producers anything like a fair rate for music. This highlights more than ever the need for legislative action to address the ‘value gap’ that is denying music rights holders a fair return for their work.”

The industry’s grievances with YouTube puts the biz into Byzantine worlds, but one easy-to-illustrate example sums it up: Record labels complain YouTube does a shabby job taking down uploads of music videos posted by fans, rather than posting the official versions. YouTube can, and does, sell ads off those other videos. That’s what they say.

YouTube points to data that says 98% of the music videos it has are authorized and 75% were actually supplied by the labels themselves, and that it takes down unauthorized videos as fast as it can.

Labels also complain the deals it makes with YouTube are one-sided because YouTube offers take-it-or-leave it deals.  Most labels take it, and complain.

So there’s a lot of bad give and take. It always seems the music business either is, or believes it is, getting screwed.

It’s more pronounced on YouTube, perhaps, because music video is so huge on YouTube and its single biggest music channel is Vevo, which reportedly reaches 400 million unique users and serves up 19 billion views. Huffington Post reports Vevo has been YouTube’s “most-viewed partner” and accounts for almost four out of 10 of YouTube’s unique monthly views. Wow.

But nobody pays for Vevo on YouTube, like they pay for Spotify or Apple. IFPI says subscription music services got $2 billion in sub fees last year. Vevo got zero. Which is why Vevo, itself owned by Sony and Universal Music Group among others,  is embarking on the (seems to me) risky idea of launching a pay service.
It’s risky because there is so much free stuff out there, and as Vevo’s popularity on YouTube demonstrates, people are used to going there to get their music videos, for free. Vevo hopes bringing fans over to its app will eventually lead them to subscribe to an all-pay or half and half/ ad and pay “freemium” service.

We'll see.

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