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Business News Digital Labels & Publishers Top Stories
Further YouTube deal chatter as leaked contract is published
By Chris Cooke | Published on Tuesday 24 June 2014
So Digital Music News has published the leaked contact presented by YouTube to the indie labels that has been doing the rounds the last few days because, well, fuck it why not? Let’s all dive in and see what all the fuss has been about shall we? Oh, it’s 32 pages long. Maybe we’ll just assume YouTube are being real bastards and get on with our days?
Actually, Billboard has already listed the five key gripes the indies have with what YouTube is offering the labels if they sign up to its new audio streaming service. Top of the list is money, with the Google subsidiary committing to pay about 65.5% of its audio service revenue to the rights owners (labels and publishers), whereas most of the streaming start-ups are paying closer to 70%.
There’s also the lack of guarantees of revenue that YouTube’s competitors have generally committed to, and a clause that says that if the majors agree to lower rates in the future, the cut will be applied across the board. Plus, YouTube will continue to receive a more favourable deal on its ad-funded video set-up compared to the freemium level of Spotify et al, even though the new service will go head-to-head with the streaming start-ups.
After DMN leaked the contract last night some commentators also noted the clause that possibly outlaws so called ‘windowing’, where labels initially service content to one specific platform on an exclusive basis before rolling it out to everyone. In the main, such exclusives have been offered to download stores, and especially iTunes, much to the annoyance of the streaming sector at large.
Although, YouTube’s windowing clause covers ‘similar’ services, which might mean that an exclusivity deal with iTunes would still be OK, labels just wouldn’t be able to provide Spotify with new releases a month ahead of everyone else. However, where windowing has happened on big releases, it’s usually been driven by management rather than label bosses, with bigger acts often having such controls within their record contract. So labels wouldn’t necessarily be able to provide that commitment anyway.
As much previously reported, many indie labels around the world have dubbed YouTube’s audio streaming contract “highly unfavourable”, arguing that the proposals “undervalue existing rates in the marketplace”. Meanwhile the threat that labels which do not sign up to YouTube’s audio service will also lose the option to directly monetise their videos on the main YouTube platform has been labelled an abuse of the Google firm’s near monopoly in online video in some markets.
Of course a pessimist might wonder whether the YouTube contract, with its low-end offers on pretty much every element of a typical streaming deal, while out of kilter with the current digital music market, might not be a sign of what’s to come.
YouTube, unlike the start-ups, isn’t so keen on taking a hit or accepting extra risk today to fuel growth tomorrow to maximise sale price at an IPO the day after that. It seems certain that once all the surviving start-ups have been bought, the wider streaming sector will start negotiating its risk and rates down. The hope remains that by that point the streamers will have the kind of scale that it’s still worth doing the deal.
But nevertheless, it seems certain the majors received a bunch of sweeteners not included in the leaked contract in order for them to sign up to YouTube’s audio service, which is arguably the real issue here. The start-ups having generally offered the indies more parity with the majors, while the tech and web giants, while often droning on about their “independent spirit”, nearly always schmooze up to the major players first.
And, of course, even if YouTube’s deal is a sign of things to come, that doesn’t alter the fact that trying to force terms on the indies less favourable than those offered to the majors, and less favourable than those offered by all the companies YouTube is now hoping to compete with, by threatening to pull the promotional value and revenue stream of the firm’s existing video site, is on a totally different page to Google’s unofficial “don’t be evil” mantra.
