A very long YouTube/PRS For Music report and commentary
Posted Tue 10 Mar 2009 11:22AM GMT by theCMUwebsite.com in a-CMU-blog
So then, this is a big story, isn't it? YouTube yesterday announced it would be pulling all "premium music videos", which I think basically means any music video you'd want to watch, from its UK platform because of a dispute with the publishing royalty collecting body the Performing Right Society, or PRS For Music as they are known to their mates. The Google-owned video site said it would start blocking access to music videos to UK users as of last night, and that all affected vids should be blocked by the end of tomorrow. The announcement came as a bit of a shock to many, not least PRS For Music who say they are "outraged... shocked and disappointed" by YouTube's decision.
The decision comes as YouTube and PRS renegotiate the former's licence from the latter, which is required if the video site wants to legally feature any songs written by songwriters and owned or administrated by publishers represented by the Society, which is most of them. PRS, it's claimed, is using the renegotiations to try to push up the royalty fees it receives from the video service. YouTube, though, aren't keen on that idea, and say that the collecting society is being unreasonable, and that is why they have decided to stop showing music videos in the UK.
Confirming their somewhat radical video-pulling plan, YouTube said in a statement yesterday: "We value the creativity of musicians and songwriters and have worked hard with rightsholders to generate significant online revenue for them and to respect copyright. But PRS is now asking us to pay many, many times more for our license than before. The costs are simply prohibitive for us - under PRS's proposed terms we would lose significant amounts of money with every playback".
PRS have hit back at both YouTube's decision to pull music videos from their website, and at the video service's comments. They say that they had no warning that the video pull was coming, and that the decision has come in the middle of ongoing negotiations between the two parties. With regards the allegations they are being unreasonable in their negotiations with the Google and YouTube, they argue that the sticking point is that web company want to pay less for their members' songs, not that they are demanding more.
What is most unusual about this whole thing, other than the fact that YouTube's decision to pull all premium music videos with immediate affect is a pretty severe measure, is that the content is disappearing off the Google video site at the web company's whim, rather than because of any demands by PRS or the music publishers they represent. Normally it's the content owners not the web platforms that instigate content removal.
Unless YouTube really believe that PRS's demands are so unreasonable that they will never reach a deal, or that any deal will be so cost-prohibitive that just keeping the service going while negotiations continue is too costly, then Google's decision is presumably designed to pressure the collecting society into agreeing to a more favourable deal (more favourable for YouTube, that is). I'm not sure whether that pressure is meant to come from the public or the rest of the music industry. Will PRS For Music be perceived as the aggressor by the man on the street in this dispute, and if so will the collecting society - which recently rebranded seemingly in a bid to boost its public profile - collapse at the negotiating table in a bid to avoid becoming the pariah figure of online music fans.
Or do YouTube hope their move will persuade the music industry at large to pile on the pressure so that PRS accepts their licencing offer. If so, where will that pressure come from? Possibly the songwriters and publishers PRS represents. Perhaps YouTube believe that the actual creators and owners of the songs they feature consider a YouTube presence much more vital than bosses at the collecting society, and that this radical move will rally said song owners into demanding PRS chiefs take a less hardline position at the negotiating table.
PRS, presumably, would argue that they are acting in the interest of the songwriters and publishers they represent by not giving in to YouTube's royalty demands. They might add that those in the songwriting/publishing community - for whom YouTube style royalties are arguably more important than any record sales a YouTube presence may lead to - would rather not be on YouTube at all than be underpaid for their work.
If pressure won't come from the songwriters and publishers where else? Well, perhaps the record companies, who are, after all, co-owners of the music videos that are about to be pulled off YouTube UK (most music videos having at least four copyrights in them - soundtrack, video, music, lyrics - which will, normally, be owned or administrated by two companies, artist/label and songwriter/publisher).
For many record companies (though not Warner, who are also in dispute over royalties), YouTube is both an important tool and an increasingly important revenue stream. How many official artist and label web pages are about to lose their video feeds because they stream their own content via YouTube on their own websites? And how much money will Sony, Universal and EMI lose if UK music fans are not able to access their videos via YouTube, most people's first port of call for music video content?
Will bosses at those three majors, and the many indies who will also be affected, be on the phone to PRS today telling them to do whatever is needed to get their content back on YouTube? And if PRS won't listen, will execs at the Sony, Universal and EMI record companies start badgering their counterparts at the Sony, Universal and EMI music publishing companies who do, presumably, have quite a bit of influence over the publishing royalty society. Perhaps that is what YouTube are hoping for. Though if they are, they shouldn't underestimate the willingness of record and publishing companies owned by the same major music firms to have very different opinions when it comes to royalty issues.
Whatever, it will be interesting to see just how many videos are blocked by YouTube today, and how long either side in this debate will let the pop promo blockade to continue. Neither side win really. There are many other video websites with music video content - some licensed, some not. If YouTube goes too long without any music videos, or with sizable gaps in its catalogue, web users may start to discover those other services, some of which actually offer a better user experience anyway. PRS may not care about that, though if the sites web users are heading to are illegal sites that pay no royalties to anyone, then they're probably bigger losers than Google from any mass YouTube exodus.
Of course, coming less than three months after Warner Music pulled its content from YouTube after their royalty renegotiations faltered, the latest development also poses some questions about the future of licensed on-demand music services.
There is some disagreement among record companies and music publishers as to just how important such services are in the overall digital equation. Some say YouTube alone is bringing in substantial new revenues to record companies to help compensate for the decline in record sales income. Others say YouTube benefits more than the content owners from carrying music videos - and that the existence of on-demand video services are, anyway, contributing to the decline in record sales in the first place.
But if royalties from online music services are an important part of the revenue mix for the music companies of the future, which I think they are, and if music is one of the best ways for websites to attract and engage users, which I think it is, then both web firms and music companies need to find a system that works for both parties. And, in the meantime, need to find a way around what I suspect will become an regular problem: web firm runs out of start up capital and realises original ad revenue projections were rather ambitious just as music owners return to the negotiating table, of the opinion they were overly generous first time round to help web firm get off the ground, and now looking for pay back.
PS: The good news is, of course, that our music video service, the CMU-Tube, is powered by good old MUZU (www.muzu.tv) and not YouTube, so none of this affects us. Go enjoy some vids on us - www.thecmuwebsite.com/tube.
The decision comes as YouTube and PRS renegotiate the former's licence from the latter, which is required if the video site wants to legally feature any songs written by songwriters and owned or administrated by publishers represented by the Society, which is most of them. PRS, it's claimed, is using the renegotiations to try to push up the royalty fees it receives from the video service. YouTube, though, aren't keen on that idea, and say that the collecting society is being unreasonable, and that is why they have decided to stop showing music videos in the UK.
Confirming their somewhat radical video-pulling plan, YouTube said in a statement yesterday: "We value the creativity of musicians and songwriters and have worked hard with rightsholders to generate significant online revenue for them and to respect copyright. But PRS is now asking us to pay many, many times more for our license than before. The costs are simply prohibitive for us - under PRS's proposed terms we would lose significant amounts of money with every playback".
PRS have hit back at both YouTube's decision to pull music videos from their website, and at the video service's comments. They say that they had no warning that the video pull was coming, and that the decision has come in the middle of ongoing negotiations between the two parties. With regards the allegations they are being unreasonable in their negotiations with the Google and YouTube, they argue that the sticking point is that web company want to pay less for their members' songs, not that they are demanding more.
What is most unusual about this whole thing, other than the fact that YouTube's decision to pull all premium music videos with immediate affect is a pretty severe measure, is that the content is disappearing off the Google video site at the web company's whim, rather than because of any demands by PRS or the music publishers they represent. Normally it's the content owners not the web platforms that instigate content removal.
Unless YouTube really believe that PRS's demands are so unreasonable that they will never reach a deal, or that any deal will be so cost-prohibitive that just keeping the service going while negotiations continue is too costly, then Google's decision is presumably designed to pressure the collecting society into agreeing to a more favourable deal (more favourable for YouTube, that is). I'm not sure whether that pressure is meant to come from the public or the rest of the music industry. Will PRS For Music be perceived as the aggressor by the man on the street in this dispute, and if so will the collecting society - which recently rebranded seemingly in a bid to boost its public profile - collapse at the negotiating table in a bid to avoid becoming the pariah figure of online music fans.
Or do YouTube hope their move will persuade the music industry at large to pile on the pressure so that PRS accepts their licencing offer. If so, where will that pressure come from? Possibly the songwriters and publishers PRS represents. Perhaps YouTube believe that the actual creators and owners of the songs they feature consider a YouTube presence much more vital than bosses at the collecting society, and that this radical move will rally said song owners into demanding PRS chiefs take a less hardline position at the negotiating table.
PRS, presumably, would argue that they are acting in the interest of the songwriters and publishers they represent by not giving in to YouTube's royalty demands. They might add that those in the songwriting/publishing community - for whom YouTube style royalties are arguably more important than any record sales a YouTube presence may lead to - would rather not be on YouTube at all than be underpaid for their work.
If pressure won't come from the songwriters and publishers where else? Well, perhaps the record companies, who are, after all, co-owners of the music videos that are about to be pulled off YouTube UK (most music videos having at least four copyrights in them - soundtrack, video, music, lyrics - which will, normally, be owned or administrated by two companies, artist/label and songwriter/publisher).
For many record companies (though not Warner, who are also in dispute over royalties), YouTube is both an important tool and an increasingly important revenue stream. How many official artist and label web pages are about to lose their video feeds because they stream their own content via YouTube on their own websites? And how much money will Sony, Universal and EMI lose if UK music fans are not able to access their videos via YouTube, most people's first port of call for music video content?
Will bosses at those three majors, and the many indies who will also be affected, be on the phone to PRS today telling them to do whatever is needed to get their content back on YouTube? And if PRS won't listen, will execs at the Sony, Universal and EMI record companies start badgering their counterparts at the Sony, Universal and EMI music publishing companies who do, presumably, have quite a bit of influence over the publishing royalty society. Perhaps that is what YouTube are hoping for. Though if they are, they shouldn't underestimate the willingness of record and publishing companies owned by the same major music firms to have very different opinions when it comes to royalty issues.
Whatever, it will be interesting to see just how many videos are blocked by YouTube today, and how long either side in this debate will let the pop promo blockade to continue. Neither side win really. There are many other video websites with music video content - some licensed, some not. If YouTube goes too long without any music videos, or with sizable gaps in its catalogue, web users may start to discover those other services, some of which actually offer a better user experience anyway. PRS may not care about that, though if the sites web users are heading to are illegal sites that pay no royalties to anyone, then they're probably bigger losers than Google from any mass YouTube exodus.
Of course, coming less than three months after Warner Music pulled its content from YouTube after their royalty renegotiations faltered, the latest development also poses some questions about the future of licensed on-demand music services.
There is some disagreement among record companies and music publishers as to just how important such services are in the overall digital equation. Some say YouTube alone is bringing in substantial new revenues to record companies to help compensate for the decline in record sales income. Others say YouTube benefits more than the content owners from carrying music videos - and that the existence of on-demand video services are, anyway, contributing to the decline in record sales in the first place.
But if royalties from online music services are an important part of the revenue mix for the music companies of the future, which I think they are, and if music is one of the best ways for websites to attract and engage users, which I think it is, then both web firms and music companies need to find a system that works for both parties. And, in the meantime, need to find a way around what I suspect will become an regular problem: web firm runs out of start up capital and realises original ad revenue projections were rather ambitious just as music owners return to the negotiating table, of the opinion they were overly generous first time round to help web firm get off the ground, and now looking for pay back.
PS: The good news is, of course, that our music video service, the CMU-Tube, is powered by good old MUZU (www.muzu.tv) and not YouTube, so none of this affects us. Go enjoy some vids on us - www.thecmuwebsite.com/tube.
