The YouTube Music Land Grab, An Industry Trendon June 18, 2014 at 3:07 pm
YouTube once again finds itself in a midst of a heated dispute, this time over music. (Yesterday we reported on YouTube’s credit card misadventures). The Google-owned video service has threatened to pull down music videos from artists signed to indie labels who refuse to come to terms regarding royalty rates for its soon to launch paid music service. Videos from artists like Adele, Arctic Monkeys will disappear from YouTube’s free video service within days if not agreement is reached.
The bitter dispute is a power play pure and simple as YouTube seeks to gain dominance quickly in the music industry. Google has also ready signed deals with the majors, Sony, Warner and Universal. Critics accuse YouTube of signing lucrative deals with the majors while leaving indies, accounting for some 10 percent of the music biz, in the cold.
The Squeeze on Artists is Industry Wide
There’s no question that this is a raw deal for artists caught in the middle of a dispute between their labels and YouTube. YouTube is putting on the squeeze, but it’s a squeeze that is now industry wide. Spotify and Pandora are also notable for paying next to nothing in artist royalties. In this case, it looks more like the new industry standard. That leads to the question of just what an artist is to do about it all. Even if the indies do manage to eke out better terms, it’s likely to be a temporary victory at best. Royalty rates are going through the floor.
In an interesting post on Music Think Tank, Thomas Honeyman writes that direct sales of music might be an outdated concept in the industry. He writes that the real money is to be made from the brands who are using tours, concerts and other forms of music distribution to reach music hungry consumers. The number attached to that spend is $1.34 BILLION in 2014. In that sense, the distribution of music over mass platforms like YouTube, whether by subscription or free services, is very much a loss leader.
All of this is not to excuse YouTube’s ham handed tactics. Rather, it’s to point out the possibility that indie labels may be tilting at windmills. They may be fighting an industry trend, a current that’s just too strong, a virtual tsunami. It might well be that the interests of musicians might be best served by putting their energies into going where the real money is, in this case brands, than by squeezing royalties out of a stone.