Wherever music collection agencies and internet sites exist, there are problems.
The latest disagreement is the very public falling out between Google, owners of YouTube and PRS the UK collection agency. And when that story reaches the Ten O’Clock News, you know that it’s a significant one.
When thousands of music videos start to disappear from YouTube, you know they have a serious disagreement.
My natural inclination is to think it’s the music companies being stupid and to side with YouTube, but nothing’s ever quite that simple.
It’s clear from what PRS is saying that Google has decided unilaterally to pull the music videos:
PRS for Music is outraged on behalf of consumers and songwriters that Google has chosen to close down access to music videos on YouTube in the UK…
This action has been taken without any consultation with PRS for Music and in the middle of negotiations between the two parties. PRS for Music has not requested Google to do this and urges them to reconsider their decision as a matter of urgency.
I can’t find a Google press release – only what they’ve said in news stories. [UPDATE] The YouTube statement is here.
Our previous licence from PRS for Music has expired, and we’ve been unable so far to come to an agreement to renew it on terms that are economically sustainable for us. There are two obstacles in these negotiations: prohibitive licensing fees and lack of transparency. We value the creativity of musicians and songwriters and have worked hard with rights-holders 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 licence than before. The costs are simply prohibitive for us – under PRS’s proposed terms we would lose significant amounts of money with every playback. In addition, PRS is unwilling to tell us what songs are included in the license they can provide so that we can identify those works on YouTube — that’s like asking a consumer to buy an unmarked CD without knowing what musicians are on it.
Now perhaps Google believes that those negotiations were going nowhere which is why they’ve pulled the videos. Google is big and powerful enough to be able to do that and the record companies are the ones who are most affected by the fallout.
It’s not in the interests of record companies to have their music unavailable at YouTube. It’s the go-to place for finding a song or video that you suddenly have an urge to see. Think of artists with albums coming out in the coming weeks. If I was a record company I’d have the video of any singles or songs from that album up there and would be watching the stats very closely to see how the buzz was. How many plays is the song getting? And so on…
I’d have thought Michael Jackson’s people would be closely watching the video play stats for his music right now as well to see how well his O2 concerts are likely to go down.
For the record industry, YouTube is important, in the same way that radio’s important. Of course the collection agencies want to maximise their revenues from these outlets, particularly in light of an overall declining market, but playing Russian Roulette with Google is a dangerous game. These negotiations are big, and they’ve seemingly gone on for months.
Like iTunes, YouTube is an important arena where record companies are essentially held over a barrel – they are nearly completely reliant on others. And basically YouTube still costs Google lots of cash rather than being a cash cow.
Could the record companies set up their own platform for their videos? The must-visit destination for music videos? They could. It’s not too late. Ironically, they might get stung my the Competition Commission if they did and locked out others (as Project Kangaroo recently discovered). But as sites like Hulu in the US has discovered, if you have the right mix, people will come. Include all the features that YouTube has like allowing embedding, including adverts (ironically, Google is the biggest player here), and links to allow you to actually buy the music or videos alongside (something YouTube’s only recently really added in). You might be able to get a replacement service into the wild.
Fundamentally, YouTube is still costing Google rather than generating significant cash, and as such they don’t want to pay very much for their music videos. PRS is trying to maximise revenues for its members as CD revenues fall faster than digital revenues make up for it.
Catch 22.
Seeing how it pans out will be interesting.
[UPDATE] A nice piece by Mark Mulligan, better worded, but arguing similar points here. But he also addresses the issue that Google wants to know exactly which artists PRS represents.
As Mulligan notes, this whole arena is getting very fragmentary, and not every musician is represented by PRS in every arena.
Indeed there are some very interesting developments at a European level that may mean that going to a different collection agency altogether is an option.
Of course if Google is to pay for every play of every song on their system, then it’s only fair that PRS lets them know precisely which ones it should be earning cash from and which it shouldn’t.
[UPDATE 2] Amended further to include a link to the YouTube statement on the disagreement as well as quotation from that statement.