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?

Filed Under: business models, free, hosting, video, youtube
Companies: google, vevo, youtube


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  1. identicon
    Michael, 18 Dec 2009 @ 4:06am

    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.

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