Shouldn't The Labels Be Paying YouTube For All The 'Free' Service They Provide?

from the because-free-is-bad,-right? dept

I recently wrote about Simon Cowell’s conflicting statements expressing anger that YouTube didn’t pay him for showing the Susan Boyle video millions of times, while then being happy that the same video will result in 10 million album sales. In my latest column for The Telegraph, I explore how the legacy music industry made a huge mistake in attacking YouTube and having videos pulled down off the site for not getting “paid” enough, when just a few years ago if they had wanted to put up music videos of their bands, they would have paid an arm and a leg for software, hosting and bandwidth — and the consumer experience would have been a hell of a lot worse (RealNetworks media player, anyone?).

In thinking more about this, I was realizing how hypocritical the recording industry is on this particular topic. After all, they go on and on about how bad “free” is, and how they must get paid for any use of their content or they can’t survive. And, yet, when someone gives them something for free (and YouTube provides free software, free bandwidth, free community and a bunch of other benefits), they complain that they’re not getting paid. It’s an incredible double standard. If the recording industry were actually being intellectually honest (I know, I know…), wouldn’t they be demanding to pay Google for providing such a service, since (as they claim) you “can’t make money from free”?

Separately, I had wanted to mention this in the Telegraph column, but ran out of room. It is worth noting that at least some of the industry has, in some ways, “embraced” YouTube with the launch of Vevo a couple weeks ago (though, that launch was completely bungled by apparently not expecting anyone to actually visit the site). I still haven’t quite figured out what Vevo is, however. It’s a joint venture of Google and Universal Music, with EMI and Sony Music as partners (Warner remains the major label holdout). As far as I can tell, though, it just seeks to be a separate platform to give the labels some more “control” over videos on YouTube. I still can’t figure out why this needs to be a separate company, other than to play financial games. Isn’t this just a feature of YouTube?

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Companies: google, vevo, youtube

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Comments on “Shouldn't The Labels Be Paying YouTube For All The 'Free' Service They Provide?”

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Lobo Santo's Ugly Goldfish says:

If they want to sell it as ad space

They should market it as ad space, and let the people who OWN the content decide if they want to be on it or not. YouTube doesn’t work this way, it allows the public to upload stuff regardless of copyright, and waits for the DMCA. YouTube by it’s nature is entirely dependant on the content, without it, it is another blank website.

One day you guys will wake up and realize that the choices of advertising and promotion should be made by the content holders, not by the websites trying to profit from it.

Lobo Santo's Ugly Goldfish says:

Re: Re: Re: If they want to sell it as ad space

I can answer both of you at the same time.

Word of mouth will never die. Companies trying to profit off of other people’s properties don’t get the right to charge for it as well.

As for viral campaigns, viral is all about PEOPLE, not about being held hostage by a website that wants to charge you so they can use your product to make more money. Viral is person to person, not a demand by website part of the business.

BullJustin (profile) says:

Re: Re: Re:2 If they want to sell it as ad space

The main difference here is that YouTube makes it’s money off user eyeballs, which it pays for, not recording companies’ music, which fans upload. YouTube isn’t profiting off the backs of the recording industry, rather the recording industry is profiting off the back of YouTube. By you’re own logic, the record companies owe YouTube substantial money.

YouTube is all about people. After all, the name means “YOU on the Tube”. It is record companies that try to hold YouTube hostage. YouTube doesn’t charge it’s users to view the videos, it charges it’s advertisers to access its users. Why is this so difficult for you to understand?

Lobo Santo's Ugly Goldfish says:

Re: Re: Re:3 If they want to sell it as ad space

The main difference here is that YouTube makes it’s money off user eyeballs, which it pays for, not recording companies’ music, which fans upload.

How do they get the eyeballs? With the recording companies’ music. See? You made my point for me.

BullJustin (profile) says:

Re: Re: Re:4 If they want to sell it as ad space

The eyeballs got there long before the music did. YouTube’s success came initially from people uploading videos of themselves. Only later did those same users decide to use it to share music they liked. Hence, the eyeballs were there before the music, and because of those preexisting eyeballs, the music profits. You should really research your points before you assume an untenable stance.

Anonymous Coward says:

Re: If they want to sell it as ad space

And the content owners are entirely dependent on distribution providers: radio, tv, internet, shiny plastic disc stores, etc. If a band created the next “Stairway to Heaven” today and nobody was able to hear it would anyone care?

There are plenty of content owners who want their content up on Youtube. Can any of the content providers show that they are harmed by Youtube? It seems more like they are mad that someone else is able to make money in way they cannont, and they are mad about it.

Lucretious (profile) says:

Re: If they want to sell it as ad space

Warner’s lawyers ran off at the mouth just like you are but once Youtube shut them out, boy did they ever cry like babies to be let back in.

Now that I think about it, if lawyers were removed from the equation the entire industry might finally be able to see where their energies should be focused rather than listening to the legal departments who make more money by keeping an antagonistic relationship alive.

Unfrozen Caveman Lawyer says:

I’m just a caveman. I fell in some ice and later was thawed out by some of your scientists. Your world frightens and confuses me. When I see your computers and their magical windows with people in them, sometimes I am so frightened, I need to just get away in my gulfstream jet to my place in Malibu.

I’m more at home hunting the Woolly Mammoth than I am hunting for a file or video on Youtube. And when I see a solar eclipse like the one that happened on July 22 when I was in Japan, I was scared! Is the moon eating the sun? I don’t know. I’m just a caveman.

But there’s one thing I do know, and that is that the labels should be able to collect all the money from all content that uses it’s music. When my clients put music into a tangible form (a recording), the music is copyrighted. However, most of them want to protect themselves, and register that copyright with the copyright office. This will protect you in the event that someone, somewhere, steals one of your songs and claims it as their own, or puts it on Youtube and collects advertising revenue.

I may be a caveman, but registering a copyright is not difficult, and whether you want to copyright just a single song (for possible digital distribution) or an entire CD. My clients just fill out Form SR, which you can get from the U.S. Copyright Office, and submit it with two copies of your CD (or a CD single) and $45 to the Library of Congress at the address on the form. Yes, it really is that easy.

hey says:


i’m just thinking. ok.. some people still have MTV/whatever, right? …and… well, does anyone need SONY/BMG music? no, right? then, why should I worry about it? hmmm. isn’t it like, if people who play music and wants to get some money for it, wouldn’t hey let people to access their music and then get paid good money, and I mean good money! you know – like say, $2500 a weak for rent, car and condoms… i, personally could live with, but other guys cannot… (those cute little boys and girls of fashion world). the question is: do those sellout musician actually like music? or like, they like something, something… something… and who the hell are they? zombies? teletubies? …aliens? what’s with that money thing? the more you want them, the more you get into wanting them?

Joseph (profile) says:

come on...

Simon’s comments were stupid. For one, I seriously doubt she will sell 10 mil, even though the album is off to a fantastic start. I think after the holiday season we will see the sales drop sharply, and eventually taper off. 10 Mil these days is almost unheard of and I really don’t think Susan is going to be that 1 in a million artist.

Also, her sales aren’t all attributed to YouTube, so again… silly comment. Unless he’s just trying to provoke them or something.

If you look at YouTube in the same light as a tv network (Mtv for example), YouTube broadcasts content, and then they attract viewers and advertising dollars based on the popularity of that content. So thats how YouTube gets paid – via advertisers. Now what about the providers of the content? Isn’t it fair that they get something, either a percentage of the ad revenue or a small flat fee for every airing of their content?

If this were network or cable tv it would be the same thing. The content creators aren’t paid by the advertisers. The company that broadcasts the show pays them.

If you’re about to say “well the music artists get the benefit of promotion via YouTube and it helps drive the sales of their album”, you would be right, but so does anything else being broadcast on tv, radio, or anything else you can think of – and they still get paid a set fee on top of that. It should be the same on YouTube.

Michael (profile) says:

Re: come on...

You appear to be confusing YouTube – which is a communication platform – with Television – which is a broadcast platform. On a broadcast platform, the platform provider makes it’s money by providing content and getting paid either by the consumer, advertisers, or both. YouTube allows users to upload content and have others see it and comment on it. YouTube does not provide the content at all. So, saying that they make their money from the content is incorrect.

Yes, the content is important, but this is not content they have control over. This is user-generated content on a platform that they provide. Providing the communication platform is their business, not providing content. It is much more like the telephone. If someone calls you and plays a CD over the phone for you to listen to, should your phone company pay the record label? If so, how could they prevent this behavior?

YouTube complies with DMCA takedown notices. They do what they can to prevent copyright material from being misused on their system. They should not be forced to deal with a financial burden because their users put this material on their communication platform. They should also not be forced to endure an unreasonable burden to try to find infringing content.

Now, the fact that this communication platform is provided for free and lots of people use it makes it a great promotional tool that the record labels should be trying to leverage. Sure, it does not fit with their current business model, but the world changes and their business may need to change with it.

Joseph says:

Re: Re: come on...

communication platform vs. broadcast platform… to me this is an argument that can’t really be won, its all in either your semantic preference or perspective. I’ll humor your description though, as a “communication platform”.

It doesn’t matter that YouTube doesn’t provide or produce the content themselves, they exhibit or broadcast the content – which generates ad revenue, which is how they make money. Is that incorrect? If so please prove it wrong, but if you read my post above I clearly state that they make their money from ADVERTISEMENTS and not the content itself. Without the content, there would be no-one going to YouTube to advertise to, and without the demographic information that can be gleaned from the content there would be no targeted advertising.

I also think your analogy of playing a CD over the phone is very inaccurate. For one thing it is on-demand, so it wouldn’t be someone calling you and playing you a CD, it would be more like you dialing-in to an 800 number and having the CD played to you. And in that case, no the phone company shouldn’t pay (that would be akin to your ISP paying in your example, not YouTube) but the service that owns the 800 number that plays the CD should pay for that service.

Joseph says:

Re: Re: Re: come on...

and for the record, those services actually used to exist, I myself patronized them. I can remember specifically in the mid-90’s, The Source magazine had an 800 number that you could call to listen to album tracks before the record was released. It was all automated, and on-demand, and guess what – they charged for it! And I guarantee they took that money and turned around and paid it to the record labels.

robin (profile) says:

Vevo is...part deux

“I still haven’t quite figured out what Vevo is, however”

the ceo of vevo, a certain mr rio caraeff, has posted a lengthy description in the comments to this article as to what his company is and does. feel free to read.

but my take is that the simple idea is to earn advertising dollars (income) from that old promotional tool (videos). he goes on and on using alot of jargon, but this is the base idea.

“In order to build a meaningful business around music videos…VEVO will manage the ad sales, ad inventory and underlying audience metrics to create a large scale network” – rio caraeff

Anonymous Coward says:

“Sorry, Vevo is not available in your country”. Which reminds me of Hulu, and means that this is just one more service I will never use, even if it becomes available. The way the content industries try to prevent me from consuming their content is very frustrating. On the other hand, I get a big “Welcome, p2p is available in your country!” every time I try torrents. So there. Vevo is not, and will never be, YouTube.

Hephaestus (profile) says:

Its a nice move by google ....

The launch of Vevo with google-youtube hosting gives the execs at Universal Music, EMI, and Sony Music the illusion of control. It gives them a hulu type site for them to run without the need to come up to speed on the technology or paying anything. This seems to be the same “give them enough rope” method they seem to be moving towards with the newspapers. Its actually a great move on googles part.

Michael II (profile) says:

"Whether" they should pay?

Odd debate, as the question of whether YouTube should pay for showing content was never an issue. The issue is how much.

It’s also odd to see how so many people are actually against the very idea of creators or labels making money off music, as if [insert favourite band/performer] was living off an inheritance and can afford to record, release and promote music just for the sake of it. We can grumble about labels. But the harsh reality is that without them, not much actually happens. The battle for the UK n° 1 was between two Sony acts, not two indies or two self-produced acts. Only large labels can create and sustain that level of awareness.

Mike Masnick (profile) says:

Re: "Whether" they should pay?

Odd debate, as the question of whether YouTube should pay for showing content was never an issue. The issue is how much.

Why not? YouTube is providing a free platform, free software and free bandwidth. Why should they pay ON TOP of that? Shouldn’t musicians be paying them for all that?

It’s also odd to see how so many people are actually against the very idea of creators or labels making money off music, as if [insert favourite band/performer] was living off an inheritance and can afford to record, release and promote music just for the sake of it.

Whoah. No one said that musicians shouldn’t make money. Not at all. No one has come close to saying that. What we’re saying is that they need to come up with smarter business models that don’t rely on artificial gov’t backed ways of making money.

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