Is Google trying to 'blackmail' small record labels with YouTube's new answer to Spotify?

[Andrew Reid]

Editor's note: While the GH4 guide takes pride of place on my home page I am using the forum as the regular EOSHD news-feed and blog-roll.

 

This YouTube story puts the Vimeo copyright stuff into a whole new light.

 

Apparently YouTube are launching a streaming music service to compete with Spotify. It's subscription based and ad-free, but the royalties Google want to pay to the musicians is miniscule. We're talking REALLY minuscule here, and Spotify is no angel. Radiohead took steps to withdraw their music from Spotify when they saw the fees. Google is a much larger, much more cash-rich company, yet their royalties for streaming are smaller than Spotify.

 

On the one hand YouTube has enormous traffic, so the stakes are high. Google with their business head are right to drive a hard bargain with the music industry on this... Especially because the platform is the number 1 promotional channel for the music industry.

 

Because of that, Billy Bragg has accused YouTube of trying to 'strong-arm' record labels into accepting extremely low royalties for the subscription fee music service... I.e. if you don't join the service, you won't be welcome to promote your artists.

 

I can see how it works two ways for the record labels, but the problem for them is that streaming long term is going to replace record sales.

 

How the hell are they supposed to make money?

 

All the free promotion in the world is useless if you have to sell everything for a pittance.

 

It gives you an idea perhaps of a potential strategy the music industry is using with Vimeo. Stung by YouTube's low streaming rates and a minuscule share of advertising revenue, they are holding a gun to the head of Vimeo in order to (I think) to drive a hard bargain when it comes to allowing their music to be streamed on Vimeo clips.

 

Already I feel safer uploading a non-commercial artistic video of my own to YouTube knowing that at least (in some minuscule way) the record label and artist are getting paid, via advertising. I don't like advertising on my videos but it's better than not being able to exercise artistic freedom in music selection and having Vimeo reject the video outright and not give a penny to the music industry for use of the song.

 

If YouTube can up their rates to the music industry, then the advertising revenue will go a long way to freeing up visual artists in terms of using the music...

 

The musician gets paid, the record label gets paid, both get exposure and the visual artist gets a career leg up and the video isn't compromised by lack of choice on the sound track.

 

Seems like a perfect deal to me...

 

Let's pressure Google into making it happen. I'm totally with the small record labels on this one.

 

Further reading: http://www.bbc.com/news/technology-27694353

[AaronChicago]

The music biz sucks right. Not music, but the business. I used to be in a band signed under the wing of EMI, and learned quickly theres slim to none chances of making a good living.

[Andrew Reid]

I at first thought it might be a problem of supply (too much) and demand. But then I thought... no, there's plenty of demand and actually the supply of GOOD music is tiny compared to how much crap there is out there.

 

So somebody somewhere is hiving off the cash big time.

[AaronChicago]

If an artist can end up owning their own publishing rights, then they're in a great position. If you get a song on TV you can really make good cash. Labels usually pressure new artists into signing over those publishing rights.

[Andrew Reid]

Yes but someone has to manage and negotiate on behalf of the artists. Can you imagine the hassle that Google would have to go through negotiating rights with the individual artists by email!?

[Andrew Reid]

To: Thom York

From: Google

 

Dear Mr York

 

We have heard you are a musician. We think that's cool. Have a cigar.

 

Yours sincerely

 

Google bot

[Bruno]

It's all relative and there's also big name TV shows offering nothing for new bands' music, just promising exposure, which can turn out to be good, but it's still a terrible system.

 

Record labels spent 10 years fighting the digital formats, now that they realized they should have embraced them instead, they're totally lost and have no clue what they're doing, the rules have completely changed, and no one knows exactly what the new rules are, because things are still rapidly evolving, and those guys are too slow to ever catch up.

 

Big record labels are like the big Hollywood studios, they're just interested on large blockbusters, and the small independents have to make do with no money, and they do, because they're not money driven in the first place.

 

This documentary shows how messed up things are with new media:

http://www.pbs.org/wgbh/pages/frontline/generation-like/

 

The song that was used in that video that went viral, showing couples kissing for the first time, sold 1 million copies on iTunes that week... there's loads of new roads for musicians (and artists in general) to explore, just forget about the past, it's not coming back.

[Bruno]

Yes but someone has to manage and negotiate on behalf of the artists. Can you imagine the hassle that Google would have to go through negotiating rights with the individual artists by email!?

 

There's companies/websites in place to make the process simple to everyone looking to buy or sell music.

You can have your music available on all digital platforms by dealing with a single service, google will be no exception.

[AaronChicago]

@Andrew,
Yeah I mean initial signing with the label. ASCAP and BMI deal with the publishing to companies. That would be a nightmare forGoogle to have to contact each artist.

[AaronChicago]

I've been out of the biz for 5 years but here's how it works when signing to a label.
Negotiate signing bonus (which is recoupable by the label.
Negotiate album deals. 1 is ideal. Most new artists with little leverage get 4 or 5.
Negotiate publishing. Labels will try to get alot of this. 50/50 is pretty standard. You register all song writing credits with ASCAP or BMI.
When a company wants to use your song, ASCAP or BMI destributes the funds appropriately.

Another common deal with big artists now is a 360 deal where the label even gets a cut of the artists touring profits.

[AaronChicago]

I also forgot, you negotiate points on each album/single sold. Usually 100 pts total divided up to label, artist, producer, mixer, etc.

[Nikkor]

I know a lot of people in the classical music business and they don't make money on royalties or recordings but giving concerts. I don't see why any other music style should be more special. A good interpretet makes more money than most qualified workers, I can't see how you could justify more than that.

[Quirky]

All the free promotion in the world is useless if you have to sell everything for a pittance.

 

That's the irony of the whole online business and the great levelling effect of the internet, isn't it. When everybody is a superhero/cinematographer/etc, no one is. When everything gets commoditised, nothing has any value, and no one makes a dime. Only those who control the delivery chain make some profit. Hence Google and their plans for YouTube.

 

The phenomena is not limited to the music industry, though. Most businesses mistook and then embraced the internet as the new bonanza for mass marketing, only to find the market becoming more fragmented, niche'd and worst of all, commodified than it ever was, even before the age of recorded music. All in all, both businesses and the consumers got what they bargained for.

 

 

Already I feel safer uploading a non-commercial artistic video of my own to YouTube knowing that at least (in some minuscule way) the record label and artist are getting paid, via advertising. I don't like advertising on my videos but it's better than not being able to exercise artistic freedom in music selection and having Vimeo reject the video outright and not give a penny to the music industry for use of the song.

 

If YouTube can up their rates to the music industry, then the advertising revenue will go a long way to freeing up visual artists in terms of using the music...

 

I know I don't have a solid counter-argument for this (yet), but that sounds like a non-sequitur to me. In relation to the previous discussion about the need for a new licensing system, I don't see something like this as a feasible, or at least ideal solution. Especially so as I'm not a Googlebot (un-critical Google fangeek). Things might evolve into something like that, but I hope not.

 

The musician gets paid, the record label gets paid, both get exposure and the visual artist gets a career leg up and the video isn't compromised by lack of choice on the sound track.

 

No disrespect intended, but that sounds like wishful thinking to me. Including the whole sentence, not just for the highlighted part. The highlighted part just being the most obvious bit, controversial even today.

 

But we'll see, soon enough.

[pablogrollan]

Record labels spent 10 years fighting the digital formats, now that they realized they should have embraced them instead

 

In the new business model for the music industry there are a few actors that don't make sense anymore, like retail stores and record labels, or at least as we have known them until now.

 

Before: out of the 12-15$ of the price of a CD, roughly half went to the retailer -who paid for logistics and some advertising-, and out of the remaining 6-7$, the artists got 1$. The record label had to pay for the recording & mixing and expenses related with distribution agreements, etc.

 

Now: The retailer is online (iTunes, Spotify) and has little logistics to speak of (servers), studios are cheaper and many artists can afford to build a mini-studio with profesional quality, mixing is done in a computer (no more super expensive boards required) so, whats the added value of a record label? very little.

 

Even Radiohead crossed that bridge and released an album on their website proving their label that they were actually expendable. I believe this is the trend, since producing an album is a lot cheaper now than it was 25 years ago.

 

Big record labels are like the big Hollywood studios

 

They share a narrow-minded attitude, but they are not the same. Even low budget movies cost hundreds of thousands of dollars and involve the work of dozens of people. You still need someone to pay -or gather the investment- for that in advance and manage the production, even if it's just a small indie production company. But how many people do you need to produce a record? and how much money? that makes a big difference...

[Quirky]

If an artist can end up owning their own publishing rights, then they're in a great position. If you get a song on TV you can really make good cash. Labels usually pressure new artists into signing over those publishing rights.

 

Apparently the music industry could use a similar 'revolution' that started shaking the book publishing industry about six years ago. The major publishers could dictate the rules and compensations to the authors pretty much the same way, but they no longer have the monopoly. Self-publishing has evolved from (alleged) vanity publishing into a viable, and often more profitable way of publishing for the authors than signing a deal with a big publisher. The publishers can no longer dictate the publishing and distribution deals. The gatekeepers have become obsolete, as there are now multiple different gates into the land of publishing.

 

The new model works for both newcomers and already established authors with millions of readers. There are several fairly well known case studies ever since circa 2008, where, for example, an 'unknown' young aspiring female author has become a huge hit without any help by the publishing houses and made a million or more by self-publishing, starting from scratch. Meanwhile, some already established authors have walked away from ample six figure book advance deals offered by major publishers, because they thought they can do better without them. They did, and still do.  

 

There are also a number of case studies where an author may get along nicely with a combination of self publishing and publishing via a major publisher.  Even the creator of the Harry Potter saga, J.K. Rowland, whose first Harry Potter book originally got rejected by all the major publishing houses but ended up making millions for both herself and much more for her publisher, has come up with her own publishing house, even though she is still cooperating with a big publisher, too.

 

I know the music industry isn't quite the same, but perhaps similar enough to benefit from a similar 'revolution.'

Whatever Google is up to is not likely to be the best interest of the artists in mind, anyway. Their interest is only in snarfing the next mass-delivery channel before the likes of Amazon and Apple come up with their business models. Just like with the search business and social media business, what they end up serving is a commodity to advertisers, not a quality music channel to the listeners and filmmakers.

 

 

Yes but someone has to manage and negotiate on behalf of the artists. Can you imagine the hassle that Google would have to go through negotiating rights with the individual artists by email!?

 

Not necessarily a major problem. Case in point, again, the book publishing industry. Now there are a number of aggregators between the major distributors and the artists. Amazon being an example of a company being both an aggregator, publisher and distributor. Apart from doing it all by themselves, they do also take in work of artists carried by other aggregators like Smashwords and others. Which, in turn, can and do offer the artists they represent to all the major retailers like Amazon, Kobo, B&N, Apple iBooks, Sony and so on, and also through their own online stores.

 

Furthermore, the authors can and do hire their own agents, editors and proof readers, and the system works. The change in the industry has already resulted to a whole new businesses, where independent editors and agents have started new businesses serving the self-publishing authors. In some cases even some of the traditional publishing houses have started offering their own editing services as separate packages.

 

Perhaps the exact same model that emerged in the book publishing industry wouldn't work in music industry, but something along the same lines just might. 

Musicians could, at least in theory, make separate deals for streaming, digital download and printed album sales, too, if the traditional model was challenged by the artists themselves. In such a scenario, the artists would also have the power to decide wether or not they wish to licence their work for filmmakers, advertisers and others for their visual work. It doesn't have to happen via Google and littering everything with advertising. Native or direct. I know Google are still making a lot of money by auctioning online ads, but (the promise of) monetising everything with online advertising is a bubble that is likely to burst eventually, anyway.