I’m just going to dive into the current biggest controversy in the music business. Does YouTube help the music business or does it hurt? Is it good for artists but not for labels? Or vice versa? If it hurts, how much does it hurt and how could it stop hurting and start helping?
First, it’s important to understand how the whole YouTube thing works. Originally, YouTube was the first significant video sharing site. It enabled all of us to post videos of our dogs and cats and kids and share them with everyone. It was social and it was easy. It also allowed us to share silly videos of us lip-synching to Madonna (was that just me??) and to upload videos of our favorite artists playing live. Eventually, people began posting actual music videos found online or recorded from the screen, recordings of live shows and made music videos using other people’s music. And all this activity was happening as CD sales were tanking and music piracy was flourishing. Meanwhile, in large part because of all these videos (arguably videos with music drove considerable traffic and attention) Google acquired YouTube for a number with lots of zeros behind it. But this all sounds like piracy and copyright violations you yell! It is BUT… YouTube never obtained a license for any music broadcast on its platform in videos because the Digital Millennium Copyright Act gave platforms like YouTube that enabled people to share content using the platform technology, but for which the platform provided no curation or oversight, A FREE PASS. Really a defense to infringement. The only rights YouTube needed were from the people uploading content – and YouTube simply asked them for a license and to guarantee they (the uploaders) had the right to upload the content. YouTube’s only additional obligation was to take down content if/when they were notified by the content owner that the content was infringing. And in doing these two things, YouTube (and its parent Google) were protected and all the infringement claims were effectively blocked by their Wonder Woman like shield in the form of the DMCA.
However, in a bid to stop spending legal fees and return to the business of making money, YouTube and the labels and publishers and the PRO’s entered into various agreements to do business together. YouTube created a content identification system that matches music in a video to an artist/label/publisher using a database of music “fingerprints.” Then the owner of the music can elect to run ads around video containing the music and YouTube splits the ad revenue with the labels and publishers. And if an artist or writer does not want their music in videos on YouTube, they can elect (or their label/publisher can elect) to just have the video taken down (although that becomes a bit of whack-a-mole because there is no mechanism for take-down and stay-down). This has created an uneasy and in some cases angry detente in the marketplace between all the music-related parties. The source of the anger and frustration of the labels and publishers is the DMCA. Because the DMCA (as interpreted by many courts) gives YouTube the benefit of a shield to the lawsuits, the labels and publishers have limited bargaining power. And that, in turn, gives YouTube an advantage over other streaming services (like Spotify and Soundcloud) who do not have the benefit of the DMCA defense.
YouTube maintains that proper use of their tools enables artists to connect with their fans, build their brand, enables their fans to engage with the music by making their own music videos to their favorite songs – all for free. And with the content ID system, the labels and publishers can also earn money by putting ads around the videos. And in fact there have been some big success stories of new labels and artists using YouTube to build their fanbase. Spinnin’ Records, recently acquired by Warner Music for over $100 million, built their business using YouTube as the primary marketing platform for their mostly EDM roster. Once an artist found its fanbase, the artists, with the help of Spinnin’ toured and sold merchandise and generated significant income. YouTube did provide the artists and label income as well – but it’s important use was as a marketing/publicity tool.
BUT, YouTube is not a good marketing fit for every artist/writer. And every artist/writer does not want to let others make music videos using their music. Furthermore, putting music in videos is synchronization licensing – licensing that has been and continues to be a great source of income for artists. Legally, for a piece of music to be used in a video, game, ad, or behind other moving images, the person or company creating the video must obtain the right to use the music before that video can be broadcast anywhere. So if an independent filmmaker wants to use music in their film, they need to ask permission and negotiate a deal and pay the owners of that music- both the composition and the recording. On YouTube, much of the music used in the videos has not been properly licensed by the creator. YouTube is the distributor not the creator. So the income the artist/writers earn from YouTube is distribution income, not sync licensing income. This sync licensing income is just lost.
The other item that is lost in the YouTube system is an artist/writers right to say they do not want their music used in any way that is not approved in advance. YouTube has effectively removed an artist’s right to dictate how their art is used. Philosophically, some people say this is actually beneficial for society – new art is often created on the back of existing art and this progression allows for the development and progression of the music industry as a whole. Perhaps… but that ignores the laws on intellectual property – laws that protect companies like YouTube from other people stealing and re-purposing their technology without prior approval. And laws that allow artists (and their labels and publishers) to have control over their business and their image – a right accorded other businesses. So why should certain types of intellectual property be protected and others not? And who is the arbiter? And why shouldn’t an artist or label be able to decide who they want to do business with and how to share their intellectual property and how to be compensated for allowing others to use it?
Lots of questions with no easy answers. But certainly ignoring the rights and business needs of artists, writers, labels and publishers cannot be the answer. Next up – possible solutions.