YouTube recently announced plans for a subscription based music service in the vein of Spotify or Google Play. The service will charge users to watch and listen to music without ads, as well as allow downloads to mobile devices. Rumors are that the company has already made deals with major music labels like Sony, Warner, and Universal, but independent labels are facing trouble. Robert Kyncl, YouTube’s head of content and business operations, has allegedly said that indie labels who do not sign licensing deals with the service will have their content blocked and possibly have it removed from YouTube’s free service entirely. There is no exact quote from Kyncl stating that content will be blocked or removed, but this has been met with much controversy, indie label push back, and much confusion.
WIN, a global trade body representing independent labels, have responded to the service’s initial press by concern that “…YouTube’s recent policy of approaching independent labels directly with a template contract and an explicit threat that their content will be blocked on the platform if it is not signed.” WIN also claims “the contracts currently on offer to independent labels from YouTube are on highly unfavourable, and non-negotiable terms, and undervalue existing rates in the marketplace from existing music streaming partners such as Spotify…” YouTube has provided an official statement responding to these claims with “We have successful deals in place with hundreds of independent and major labels around the world, however we don’t comment on ongoing negotiations.” These statements have lead to rumors and speculation as to the fate of these independent music labels and artists alike. Some say their content will be blocked and/or removed completely, if the label has no contract. Others say the labels will be kept from the subscription streaming service, but can keep their videos up while not being able to monetize their content for ad revenue. Most of the confusion stems from the use of the word “free service.” Most everyone is familiar with going to YouTube and watching videos for free. What is lesser known is the system in place that automatically runs advertisements against this content and allows the rights holders (in this case labels, artists, music publishers and writers) to earn revenue off of streams of their music, Content ID. YouTube’s Content ID program recognizes artists tracks and allows the rights holders to automatically run advertisements against them and split the revenue with YouTube. This is in addition to royalties that are paid to performance rights organizations and societies for streams.
Ultimately, the situation is currently unclear as to whether music will be blocked entirely, or if it just won’t be eligible for monetization. Another question is how music included within content, as an backing music for example, will be handled if not available on the streaming service. YouTube is remaining mostly quiet on negotiations and simply trying to get coverage on the emerging service, while independent labels and content creators are asking hard questions about their future with the site. The subscription service is said to be launching by the end of the year, so YouTube needs to respond and clear the air of the specifics and the deals in place for their site to remain on good terms with artists and their labels.