YouTube’s Pressure Tactics? Good Old Fashioned Corporate Strong-Arming

OP ED from Peter Getty, musician, producer, writer and philanthropist. A member of the band Virgin Whore Complex, Getty founded the indie label Emperor Norton.

As if beleaguered indie labels needed another battle…

Music streaming services like Spotify and Rdio are making a lot of money delivering unlimited streaming music in return for a flat monthly fee. Never shying away from a bandwagon, Google too is now jumping into the game. Corporate subsidiary YouTube is currently cutting deals with music labels in preparation of Music Pass, a music streaming service to be released later this year.

YouTube is offering record-low payment rates for labels and artists. While many of the major streaming services offer as much as 70% of revenues to artists and labels, Music Pass will pay out as low as 55%.

Even with rates that low, YouTube has still found a way to favor the major labels. Indie labels are making public statements that the licensing terms being offered to them are considerably worse than those offered to major labels. Adding insult to injury, there is a clause in the contract that could lower the rate paid to independent labels if any of the three major labels (Sony, Warner, and Universal) agree to a lower payment rate.

Artists, executives, and fans are crying out that Music Pass will mark a major blow to the music industry because indie labels can’t say no. Beggars Group, who represent indie acts like Bon Iver and Alabama Shakes, are at the moment unlikely to reach an agreement. There are already rumors that the label may be facing the removal of all of its content from YouTube.

Not having access to YouTube is disastrous for independent labels. YouTube’s massive audience is how many small acts get discovered. It’s also a way for independent labels to begin monetizing music via ad revenue. Restricting access could have huge implications for innovation and diversity in the music industry.

Beggars Group music would still be on YouTube, mind you. Vevo, who own the exclusive rights to the videos of some indie acts, will still be able to play their music. Users can still upload their music. Beggars Group will be the only entity unable to monetize their music on YouTube.

This is corporate strong-arming, plain and simple. YouTube knows how powerful they are. Manipulating the digital music world for profit in this way is bad for artists, bad for labels, and bad for consumers.

The president of the American Association of Independent Music, Richard Bengloff, has formally requested that the Federal Trade commission intervene. Bengloff argues the licensing terms constitute ‘an abuse of a dominant position with regard to the digital music and video streaming circuit.’ Ed O’Brien of Radiohead notes that ‘to restrict [indie labels] in this way is to risk creating an Internet just for the superstars and big business.’