More Problems for YouTube, This Time with Musicians

Music labels are calling YouTube the biggest threat since song piracy

Recently, YouTube has been in the spotlight for some not so great things. It’s had issues with brand safety, it’s SVOD Service has some distribution kinks, they were recently sued by YouTuber ZombieGoBoom, and now they’re having problems with musicians. Music is huge for YouTube. According to the video giant, YouTube accounts for 25% of all the music streamed online. But musicians are no longer happy with the payout they’re receiving.

Artists are being paid an estimated $1 per 1,000 plays on average, while Spotify and Apple music pay a rate of almost $7. According to the Washington Post, music labels have accused YouTube of using a legal loophole to keep the payout low and are calling YouTube the biggest threat to the music industry since song piracy. But YouTube isn’t backing down from the rate of pay, the company stresses the benefits to musicians of promotion on one of the Web’s most popular sites, and also warns against attacks that could shrink competition among streaming services.

“The industry should be really, really careful because they could close their eyes and wake up with their revenue really concentrated in two, three sources,” YouTube’s global head of music told the Washington Post, referring to Spotify, Apple Music and Amazon Prime Music.

The music industry claims that they are backed into a corner when negotiating with YouTube, because its almost completely shielded by federal law from being responsible for what users post on the site. This means that even if an artist doesn’t want their music on YouTube, there isn’t much they can do about their work being posted on the site by someone else (only request for it to be taken down).

“It isn’t a level playing field,” one executive at a major music label who requested to remain anonymous told the Washington Post. “Because ultimately you’re negotiating with a party who is going to have your content no matter what.”

Though the Alphabet-owned company may be fairly safe in the U.S., things in the European Union are a different story. The E.U. has recognized that there is a “value gap” between song royalties and what user-upload services, like YouTube, earn from selling ads while playing music. The E.U. is expected to release new rules later this year for how services such as YouTube handle music.

YouTube has dismissed the value gap and points to an economic study it commissioned, which suggests that no such thing exists. The report said YouTube promotes the music industry, and if the company stopped streaming music, 85 percent of users would switch to services that offered lower or no royalties.

However, a different study by an independent consulting group estimated the YouTube value gap at more than $650 million in the United States alone, The Washington Post reported.

Value gap or no value gap, one thing is for sure; this new battle will not only impact the finances of the music industry, but also how millions of people around the world listen to music, which so far, when using YouTube, has been cost free.

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