At the end of last week, YouTube music boss Lyor Cohen published a blog that outlined why YouTube was good for music and why the music business was wrong to attack it on issues such as safe harbour and the value gap. The industry took its time to chew over Cohen’s thesis, but different bodies have now formulated their own retorts.
Cary Sherman, chairman & CEO of RIAA, echoed Cohen’s “five observations from my time at YouTube” structure in his original blog with what he terms “five stubborn truths about YouTube and the value gap”. He is dismissive of what he sees as Cohen’s hollow grandstanding here (“we’ve heard pretty much the same claims and arguments from YouTube before”) and adds that while “Lyor’s heart may be in the right place, the numbers and YouTube’s actions tell a different story”.
Among Sherman’s salvoes are that YouTube is exploiting safe harbour “to avoid paying music creators fairly”, which he believes “jeopardizes music’s fragile recovery and gives YouTube an unfair competitive advantage that harms the digital marketplace and innovation”. Secondly, he says that safe harbour is not, as Cohen claims, a distraction and is exploited by the video platform to “skew negotiations with music creators in its favor [and] to offer a below-market rate”. Thirdly, he accuses it of stonewalling around its subscriber numbers (the subtext here being that YouTube does not really care about building a subscription business) and underreporting its streams, constantly flip-flopping on what its claims about the service actually are. Fourthly, he calls BS on Cohen’s claims that YouTube pays $3 per 1,000 streams in the US, citing analysis from Nielsen and BuzzAngle that suggests it is half of what Cohen claims. And finally, he says that YouTube’s success has been heavily built on music and, given what it pays, he questions if YouTube is a “true partner” for the music business.
Sherman ends by arguing the RIAA feels that safe harbours should be preserved but they were enshrined in law two decades ago – in an age of dial-up and “before it was ever imagined that users could upload 400 hours of video to YouTube every minute” – and so need to be recalibrated to apply to the modern age.
Meanwhile, in the UK, BASCA – the body representing songwriters, composers and lyricists – also outlined its criticisms of Cohen’s blog. It lays out how YouTube is valued at $40bn but the recorded music business has shrunk to $16bn, with the former building its business on the back of the latter’s copyrights. It also takes issue with how much YouTube pays through to copyright owners – currently a 45% cut of monetised advertising. “It is outrageous they are taking that much,” it says. “Plus they take all of the rest of the advertising income that is not officially ‘monetised’ by rights holders too. Then it is too easy for users to opt out of adverts. So what is the incentive to subscribe?”
It also takes issue with what it regards as the serious limitations of Content ID on YouTube. “There are only around 8,000 users approved from around the world, mainly record labels, who are authorised to upload music to this system;” it claims. “Everything else will therefore remain un-monitisable.” It adds that the onus on rightsholders (whose music is not in the Content ID system) to issue takedowns is far too cumbersome to be fit for purpose.
“YouTube boast about the number of take-downs that are submitted each day,” it concludes. “This is not something to be proud of; it is a reflection of a broken system. It is trying to mend the broken windows after they have been smashed rather than preventing them from being broken in the first place.”
These are both stinging attacks on what YouTube perhaps intended as a charm offensive or a way of justifying its stance. YouTube and Cohen have yet to respond to these attacks but the whole thing dissolving into an endless cycle of “he said, she said” helps no one. Even so, both sides are clearly digging their heels in here – accusing the other of being wrong/wrong-headed, truculent, sparing with the “facts” and/or willfully intransigent. Hopefully from all of this will eventually spring an armistice or a compromise that everyone can be happy with. Just don’t hold your breath on it happening any day soon.