Music rightsholders attack ‘complete tomfoolery’ of YouTube

“There is a massive contradiction in the messages they are giving out… It is complete tomfoolery.”

BASCA chairman Crispin Hunt was speaking at an event held in London last night by British collecting society PRS for Music, which provided the latest salvos in the war of words with YouTube over safe harbour and the ‘value gap’.

As with the recent debates on the topic at the Midem conference in Cannes (our reports of which are here and here) the event was focused on one side of the debate: despite being held literally opposite Google’s London office, YouTube did not take part.

Instead, the event saw Hunt joined by MEP Mary Honeyball; Ros Lynch, director of copyright and enforcement at the UK’s Intellectual Property Office (IPO); Andy Heath, chairman of UK Music; Jackie Alway, chair of publishers body the MPA; Robert Ashcroft, CEO of PRS for Music; and Agata Gerba, acting deputy head of the copyright unit at the European Commission.

The panel outlined their hopes and fears for the proposed update of the EU Copyright Directive that is currently being picked apart in Brussels, as legislators try to balance the voices of the opposing sides in the ‘value gap’ argument.

Gerba opened by explaining the current climate in Brussels. While there is no consensus to speak of, she said that this had to be the end goal. “Cooperation between the platforms and rightsholders is key to make these changes work,” she said.

Ashcroft outlined his core philosophical and economic argument – dating back to the paper that he co-authored with Dr George Barker (Is Copyright Law Fit For Purpose In The Internet Era?) – about the ‘transfer of value’ from music rightsholders to technology companies.

“How do you know the economy has reached an optimal state of growth?” he asked. “That is when you come down to something known as pareto-optimal distribution of resources. That is a state where you can’t reallocate resources in any way without maybe somebody, at least, worse off. That is where the concept of consent comes in. You know that someone is worse off than they otherwise would have been if they wouldn’t otherwise have consented to a transaction.”

He continued, “The paper proved, as much as an economist can prove anything, that the economy was worse off overall. It was not just that creators were worse off because their creative works were being taken without adequate remuneration; but that the economy as a whole could not, by definition, could not achieve the maximum rate of growth under those conditions.”

Honeyball outlined just how hard the road will be for the music industry as these proposed updates to the Copyright Directive have split the European Parliament like never before.

“There are at least two sides in this debate in the parliament,” she said. “We have had some heated discussions – which doesn’t usually happen in the European Parliament […] It is two very opposing points of view which so far have proved irreconcilable.”

Honeyball made it clear which view she is backing. “I see [Google’s stance] as the American multinational view of the world. It is coming from an unbridled capitalist position – but not all my colleagues see it like that… I am not sure what way it will go, but my view is that the platforms should step up to their responsibilities.”

She reiterated just how tough the collective voices of the music industry will find things in terms of persuading Brussels to side with them. “I have never known a position like this before,” she said. “Uncertainty seems to be the way of the world right now and uncertainty seems to be the way of copyright.”

Hunt was of the belief that there are high long-term intellectual and cultural issues hanging in the balance here.

“Everything that we understand as a civilisation is based upon our appreciation of human creativity – from cave paintings to Athens,” he said. “If we, for the sake of this new technology, which is only in its adolescence, throw away not just the moral wisdom and society’s wisdom that gives creativity some kind of value [the costs will be enormous].”

Hunt made it clear who he saw as the villain of the piece here. “When Tim Berners-Lee said information should be free, he meant it should be free to access but not necessarily for free – and there is a difference,” he suggested.

“Google has deliberately, I think, conflated the idea of freedom of speech and freedom of people’s work… If we are reducing everything that has value to just stuff with a physical form, then the world stands to be a very, very dull place indeed and a very empty place. If we completely devalue intellectual property, there will be no other markets to have. On a personal level, I find it deeply upsetting that this has been turned into an industrial battle between Silicon Valley and Hollywood.”

Hunt, a songwriter himself who has worked with a number of prominent artists, explained why this was a personal as well as a professional fight for him.

“There are hundreds of millions of people listening to my tracks on YouTube and I have received about a thousand pounds in all from those hundreds of millions of listens,” he argued. “That is unsustainable for me. If people want quality entertainment, they need to pay for that quality entertainment. It can’t be free. Otherwise we’ll just have home movies – which is pretty disastrous.”

Heath took up the argument around civilisation. “We could be in for an era of cultural barbarism, the like of which we have never seen. It would be disastrous for civilisation,” he warned.

“I really think it’s that important… I cannot believe that any parliamentarians are arguing for [this] would expect to go into the butchers and get free meat. Where does their intellectual journey go from that position to the one that everything should be free on the internet? It’s asinine and it’s infantile. I am shocked that there [even] is a debate.”

Dander duly up, he did not mince the rest of his words. “It is going to be a dreadful thing for Europe. It won’t be very good for the music industry but it will be far worse for Europe. What about the citizen as a creator? That is definitely a very important future movement in this world. That will be completely lost. I really think it’s that important.”

Hunt accused YouTube of not playing a fair game in the way music makes its way onto its platform.

“There is a standard technical measure, namely the metadata, inside every single MP3; but when that is uploaded to YouTube, YouTube strips all of the data that is already in there – which, as a technical measure, should negate their safe harbour,” he claimed.

“But for some reason they rebrand it with their own particular tagging. Even though we are trying to provide the correct data, those companies are deliberately wiping that data later on.”

Hunt also argued that recent mixed communication messages from YouTube are tantamount to, in his eyes, a smoking gun in this debate.

“At the same time as they will say they are not an active host and are a passive host, Lyor Cohen – the new music ambassador for the whole of YouTube – recently boasted that 80% of music on YouTube is recommended; people think it is from search, but 80% is recommended. So there is a massive contradiction in the messages they are giving out… It is complete tomfoolery.”

[Cohen’s specific comments: “Do you know that 80 percent of all of watch time is recommended by YouTube? That’s one of the biggest misconceptions. Everybody thinks that all the music that’s being listened to and watched is by search.”]

A question from the floor opened up a wider point about the ‘value gap’. Bodies like IFPI have used the ARPU of YouTube users and set that against the ARPU of Spotify users to show how YouTube is devaluing music. But is a service like Spotify one that is, therefore, beyond criticism? Could it, in fact, be paying in a more egalitarian way?

Ashcroft argued that the streaming model on a service like Spotify possibly over-rewards the already successful while a huge class divide in artists could now be pegged out – and become impossible to cross for many.

“One of the challenges is that because we look at the total number of streams and we pay out on the basis of how many streams, there is a winner takes all thing about this,” he said. “We look at the records being broken week in and week out with the number of streams and some are obviously doing very well out of that… It’s a back catalogue thing and it’s a winner takes all thing. I am worried about the new music, the undiscovered music and the niche music not getting adequate remuneration.”

Can this be fixed? Ashcroft had an answer based around tiered payments, but the subtext was that it was unlikely to every be implemented.

“My solution to that, if I had a magic wand, is that the first N streams of anything in any period gets X and then the next 100 N gets another X and the next 1,000,000 N gets another X,” he proposed.

“What this would begin to do is actually simulate the economics of sales as we would give money upfront regardless of how many times you listen to it. If something continues to be popular over a long period of time it also deserves to earn more. There is a way, if we were to recast the value system and work out how we distribute our streaming, of being much fairer.”

Ashcroft’s feeling was the industry at the moment was at risk of missing the bigger picture and ensuring a better future for acts of all sizes. “We are in such a scramble as an industry just to get any money at all and the vested interests in the winner takes all approach are pretty high,” he said. “If I ruled the world, that is what I’d do.”

Heath was keen, however, to avoid Spotify being castigated as a bad actor here. Unlike, say, the arguments against YouTube, he felt Spotify was adding to the totality of the market, rather that unbalancing it so that one side benefitted enormously while the other was left wanting.

“Spotify has created a substantial and significant music economy where there was none before – and for that we need to be grateful… We have to recognise that it is a very early form of music distribution, but there is a huge amount of revenue coming willingly from consumers and finding its way through to music makers… Spotify is passing through a substantial amount of its revenue. That revenue is enormous and there was no revenue [there] before.”

Hunt, however, felt that dropping a sales model on top of a streaming model in terms of payment rates was doomed to come up short. While he agreed something had to give, it needed something new – not reverse-engineering an old model into the current model.

“I completely admire Robert’s aims about making it more like a sale; however, streaming is never going to be like a sale as sales are over,” he said. “We need to redefine what a sale is and look again what a stream is… All of our divisions are based on a physical market. We are going to have to redefine what this is for a new streaming market. Our splits as publishers and as record labels are going to have to be wiped clean and then re-work out what they are.”

Hunt ended by saying this was a huge battle the industry was lining up for, portraying it as the last bulwark against total, unchecked domination by American corporations. He talked of a “huge invisible lobby” in place here, claiming that Google is bankrolling reports by free internet campaigners, damning this practice as “market abuse”.

“I don’t believe the Americans are going to hold them to account,” he said of regulators on the other side of the Atlantic who seem to prize commercial success over any other cultural concerns. “The only place we have hope for is if the Europeans hold them to account. Otherwise I fear for what the world will become if it is controlled by corporations.”

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