The independent music community lashed out at YouTube over proposals for a subscription music streaming service, which the Silicon Valley giant is expected to launch soon.
It appears that in an attempt to dominate the audio streaming market in the future, YouTube is now using its near-monopoly in the video streaming space to force down royalty rates for its planned subscription service to a level that would undercut all other subscription music services – including Spotify, Deezer and Rdio – severely, according to the independent label community.
The Worldwide Independent Network (WIN), the organisation that represents the global independent music community, issued a statement slamming YouTube's reported plans to block the content of members who do not sign a new agreement for the service as "unnecessary and indefensible".
According to the statement, YouTube, owned by Google, has already negotiated separate agreements with three major labels – Sony, Warner and Universal – but has yet to reach a deal for independent labels.
WIN members say that the contracts currently on offer to independent labels from YouTube are on "highly unfavourable, and non-negotiable terms".
"Our members are small businesses who rely on a variety of income streams to invest in new talent," said Alison Wenham, CEO of WIN.
"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.
We believe... that these actions are unnecessary and indefensible, not to mention commercially questionable and potentially damaging to YouTube itself."
The industry is grappling with how to make money from music distributed over the Internet, and views Swedish-based subscription streaming provider Spotify as a possible model to follow.
Given that Spotify says that it pays an average of $0.007 per play to artists, this should give you some idea of little Google is willing to pay. Earning this kind of money per play isn't so bad when you're a widely known artist with a large fan base, but it makes it impossible to earn a decent payout for less established performers.
Singer Billy Bragg and Radiohead guitarist Ed O'Brien are among those accusing Google-owned business of trying to "strong-arm" independent labels into accepting low fees.
Ed O'Brien said that YouTube is "in danger of launching a streaming service that lacks the innovative and cutting-edge sounds that independent artists bring. To restrict [indie artists and labels] in this way is to risk creating an internet just for the superstars and big businesses."
A YouTube spokesperson issued the following statement: "YouTube provides a global platform for artists to connect with fans and generate revenue for their music, paying out hundreds of millions of dollars to the music industry each year. We have successful deals in place with hundreds of independent and major labels around the world - however, we don't comment on ongoing negotiations."
Time will tell how these contract disputes will be resolved and when the new YouTube subscription music streaming service will be launched. Until then, don’t forget that in order to get your music on Spotify, each of your tracks is required to have an ISRC code. To learn more about how to get ISRC codes, please click here.