User-generated content (UGC) featuring music, specifically on YouTube, continues to be the biggest source of tension between music rightsholders and Google. Yet could we be on the verge of UGC becoming one of the most exciting areas of growth for the industry?

Midia Research thinks that Facebook’s music-licensing efforts, which so far focus on UGC, may have a knock-on effect on YouTube’s fortunes.

“If I was part of YouTube’s lobbying team right now I’d be thinking I’ve just been given a free pass. The crux of the industry’s argument is that YouTube does not sufficiently protect copyright, enforce policing nor pay enough. Not paying enough is not directly a legislative issue, but instead a commercial factor. But the labels argue that the unique ‘fair use’ basis on which YouTube operates enables is to pay too little,” suggested the consultancy firm.

“If the assumed basic premise of this deal is indeed correct, it transforms in an instant, YouTube from wild west desperado into the closest thing global scale UGC music has to a sheriff.”

That’s thanks to its Content ID technology, which Facebook is working to match. The question is whether these new deals will put into question the changes to safe harbour legislation that labels are lobbying for.

“There is a chance that in their efforts to get more revenue from Facebook, the labels might just have compromised their ability to get even more revenue in the long term from YouTube,” suggests Midia.

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