Let’s get some background out-of-the-way first, shall we. YouTube is planning to launch a music streaming service to compete with services like Spotify and Deezer. Rumors about the service started swirling last year when Android Police tore down the YouTube Andorid app and found code which would allow for the ad-free streaming of music and offline playback.
The service, called ‘Music Pass,’ is expected to be announced at this year’s Google I/O conference on June 25. But before they can start streaming music, they have to get permission from the record labels to use their recordings.
YouTube has already inked big-money deals with Warner Music Group, Universal Music Group, and Sony Music Entertainment (the “Big 3” record labels) for the launch of Music Pass. However, many independent labels, and their representatives, have expressed anger at YouTube’s “strong-arm” bullying tactics with smaller labels and artists.
19 independent music groups from all over the world have confirmed that YouTube approached all of them with contracts that would leave them with less money and far fewer rights than the big labels. When they tried to negotiate, YouTube flat out refused to even consider any changes to the terms of the contracts.
The Worldwide Independent Network (WIN), which advocates for indie labels around the world, has given YouTube 24 hours to retract a letter which, according to The Guardian, shockingly threatens to remove videos uploaded by the indie labels from YouTube if they do not sign up for the Music Pass service.
The biggest issue, according to WIN, is that the YouTube Music Pass contracts “vastly undervalue” the rates already paid by established music streaming services like Spotify, Deezer, and others. I can see why this would be a major issue. The music industry is already about low royalty rates on those service, it’s understandable that they wouldn’t want to go any lower.
In a statement denouncing YouTube’s behavior, Alison Wenham, CEO of WIN commented: “Our members are small businesses… They are being told by one of the largest companies in the world to accept terms that are out of step with the marketplace for streaming. This is not a fair way to do business.”
She added: “WIN questions any actions by any organization that would seek to injure and punish innocent labels and musicians in order to pursue its ambitions.”
In response to the allegations, a YouTube spokesperson told The Guardian: “We have successful deals in place with hundreds of independent and major labels around the world, however we don’t comment on ongoing negotiations.”
It’s not looking good for YouTube at this point. Especially if it wants to make that June 25th deadline.
YouTube’s negotiation tactics may leave a lot to be desired, but no one can deny that they stand as an important platform for musicians, helping some of the biggest stars in the world build a fan base and secure a successful future for themselves and the businesses and labels that support them.