2016 is a massive year for the music industry’s relationship with YouTube – and not just because of the former’s drive for recalibration of safe-harbour legislation.
All three major labels are due to negotiate new licensing deals with YouTube in the coming months, with a well-briefed Financial Times piece suggesting the negotiations will see the labels attempt to “reset” their agreements with Google’s video service.
That lends important context to the pressure on both sides of the Atlantic over the growing ‘value gap’ between the number of ad-supported music streams – a figure that includes Spotify’s free tier as well as YouTube – and the revenues flowing back to the music industry from that consumption.
The RIAA, IFPI, BPI and other bodies are hammering away at this point, and while it does play in to their desire for safe-harbour reform, the licensing renewals are in their thoughts too.
YouTube has already been getting its responses in: noting its more-than-$3bn of payments to music rightsholders, while “a person close to YouTube” provided another argument to the FT. “Only about 20% of people have historically been willing to pay for music,” said the source. “YouTube is helping artists and labels monetise the remaining 80 per cent that were not previously monetised.”
What’s different this time round, licensing-wise, is the heightened concern within the music industry about how YouTube’s free service interplays with the efforts of Spotify, Apple Music and other services to sign music fans up to paid subscriptions. Midia Research claimed this week that there were 67.5 million subscribers globally in 2015 – 24m more than in 2014 – but suggested that there are nearly 600 million people streaming music for free.
The FT suggests that labels may look to keep new music off free YouTube for as much as six weeks after release, in order to funnel fans towards paid services. Music Ally has heard regular suggestions that at least one major label may threaten to pull its entire catalogue from YouTube – although that could be an opening gambit to negotiations designed to end up in the six-week measure.
Still, with YouTube’s major deals up for renewal, not to mention Spotify’s – and with SoundCloud’s already in the bag – 2016’s crop of licensing agreements will set the course for the next crucial stage in the music industry’s development.
For better or worse.
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