Analysis

Music publisher unrest growing at YouTube Multi-Channel Networks


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youtube-logoThe licensing deal announced in February between Universal Music Publishing Group and YouTube multi-channel networks Maker Studios and Fullscreen Media didn’t quite mask the increasing unrest from other publishers at the growth of such companies.

SONGS Music Publishing CEO (and NMPA/ASCAP board member) Matt Pincus has now brought the concerns further into the open with an op-ed piece for Billboard. It’s an important read.

Multi-Channel Networks (MCNs for short) like Maker Studios, Fullscreen Media, The Collective, Alloy Digital, ChannelFlip and others have grown rapidly, gathering popular YouTube creators (including musicians) into networks and selling advertising around them.

But they sit outside YouTube’s royalty payments system and Content ID detection, and are responsible for their own licensing deals for music. Or lack of licensing deals, as Pincus suggests.

“I’ve heard the media refer to MCNs as the next Cable Television. That could spell trouble. Cable TV pays millions to songwriters and music publishers every year. MCNs? Virtually nothing,” he writes.

“How good have MCNs been about getting licenses for the music they broadcast on YouTube? In a word: abysmal. Maker Studios signed a deal with only one major music publisher two weeks ago. It has been in business for over 4 years, building huge audiences streaming a capella videos.”

He notes that Fullscreen Media has deals with two major publishers, but claims neither has licensed “more than a handful of independent publishers”.

The NMPA is gearing up for a battle on this front. It may be an interesting conflict, because just as rightsholders come knocking for cash, the MCNs are discovering that YouTube ads may not be as lucrative as they (and their VC investors) had hoped.

That said, this may also drive the MCNs to look for new revenue streams, some of which might be found through deeper partnerships with music rightsholders. As optimists, we hope this is the case.

Industry sceptics may argue, however, that it might be in the MCNs’ and their investors’ interests to string out negotiations for as long as possible, at a time when they are ripe acquisition targets for broadcasters, talent agencies and other big media companies.

Is all this important? In a word, yes.

A survey released this week by IPSOS MediaCT and Wikia claims that 93% of US 13-18 year-olds visit YouTube at least weekly, well ahead of the 65% who check Facebook. Many of these teens are just as interested in the MCN-backed singers as in famous, signed artists.

That’s why the music industry needs to think more about MCNs as potential partners for (and competitors with) traditional music rightsholders, and it’s why Pincus won’t be the only publisher calling for these companies to “clean up their business and pay a fair price for the music they use”.

Stuart Dredge

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