Record Labels Not Planning On Sharing YouTube Windfall With Musicians

from the it's-all-for-the-musicians,-huh? dept

Sure, YouTube might have a good legal defense to anyone who sued them for copyright infringement, but the lawsuits would still be pretty pricey. Not surprisingly, that was part of the sticking point in the negotiations between YouTube and Google before Google finally finally pulled the trigger. In order to make that issue go away, we already noted that YouTube did questionable deals with most of the major record labels the morning before they signed the Google deal -- effectively cutting them in on the deal. Now Mark Cuban is posting an email from an anonymous industry insider that provides a few more details while making the whole deal even more questionable. As the earlier article noted, YouTube was told to negotiate with effectively a blank check (signed by Google) with the record labels to get them to lay off YouTube for a while. But, here's where it gets interesting.
  • The deal was an investment, not a licensing agreement, meaning all that cash the labels got they don't actually need to share with the artists they always claim they're trying to protect. This was done on purpose.
  • While Google and YouTube have apparently put $500 million in escrow to deal with copyright lawsuits from smaller players, handing over cash to the labels came with a promise that the labels wouldn't sue YouTube for at least six months.
  • At the same time, they would sue other players in the space -- which we've already seen from Universal Music.
Add it all up, and you get the music labels effectively taking a bribe to cause trouble for Google/YouTube video competitors, ignoring YouTube to let it grow for a while, and pocketing all of the money without giving it back to the artists they supposedly represent. The claim is anonymous, but the pieces certainly fit together nicely. It would be nice to see an alternative explanation, as this whole thing reads pretty sleazy.

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  1. identicon
    Brian Wilson, 31 Oct 2006 @ 11:03am

    From a PhoList member

    I happen to personally know the guy who ratted on the deal. Like Cuban and every other member on Pho, I got the scoop as well. I immediately called up a few sources and did some crosscheck. Well, all of it is 100% true. But its 100% legal, so what's the problem mate ?

    But, still, I never expected Cuban would actually crosspost a PRIVATE communique on Pho, which btw is a CLOSED mailing list, on his wide open internet blog. Cuban will never be given access to this sort of confidential forum from now on.

    As for the public, lemme say this. America is no democracy. From time immemorial, it is, has been, and will continue to be, a plutocracy. A bunch of us get to decide what happens behind closed doors,. and the rest of you read a filtered version of it in the press.

    Now, if there are narcs in the closed group, why, they will ofcourse be systematically eliminated. Do you really think Google, or any other corp, should openly announce their buyout plans and ask 300m Americans to vote on the deal ? Please.

    This is just business, nothing sleazy about it. If you want real sleaze, why don't you dig up some dirt on that chap Khosla who's getting your government to screw your farmers by buying acres for pennies on the dollar and handing it to him to supposedly grow ethanol crops in the guise of rising energy prices. If I were to tell you what that land is actually going to be used for, why, you would yell and scream, but I would actually have a bullet or two in my brains, so I better hold my peace.

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