EU Regulators Seem To Think They Can Tell YouTube That Its Business Model Should Be More Like Spotify

from the really? dept

We've been quite concerned about new internet regulations on the way from the EU, with a focus on how internet platforms must act. As we've noted, the effort is officially part of the (reasonable and good!) idea of making a "Digital Single Market," but where the process is being used by some who think it's an opportunity to attack the big internet companies (mainly Google and Facebook). There are two EU Commissioners heading up the effort, and one, Gunther Oettinger, has been fairly explicit that he'd like to burden American internet firms with regulations to "replace" them with European equivalents. Of course, as we've noted, when you have giant companies like Google and Facebook, they can pretty much handle whatever regulatory burden you throw at them. It's the innovators and the startups that will be shut out because they won't be able to manage it. So, ironically, in trying to hold back Google and Facebook with regulations, the EU would really only entrench them as the only players able to handle those regulations.

The other EU Commissioner deeply involved with this process is Andrus Ansip, who is generally seen as more reasonable on internet and technology issues. He actually seems to understand many of the trade offs at play. So it was mostly good to see him make some comments recognizing that across-the-board regulations may have negative consequences:
European Commission Vice-President Andrus Ansip, who is overseeing a wide-ranging inquiry into how web platforms conduct their business, said on Friday the EU executive would not take a horizontal approach to regulating online services.

"We will take a problem-driven approach," Ansip said. "It's practically impossible to regulate all the platforms with one really good single solution."
That's mostly a good sign, but you do worry about what kinds of "problems" they're looking at. Because, at the same time Ansip seemed to indicate that he was upset about how much YouTube paid artists:
Andrus Ansip, who is overseeing an overhaul of the bloc’s copyright rules, said the YouTube’s comparatively small payments to artists gave it an unfair advantage over rivals such as Spotify, the Swedish streaming service.

“This is not only about rights owners and creators and their remuneration — it is also about a level playing field between different service providers,” said the former prime minister of Estonia. “Platforms based on subscriptions are remunerating those authors; others service providers do not. How can they compete?”
Different services have different business models and offer different features and benefits. That's how competition and innovation work. What if it's Spotify's model that is the problematic and unsustainable one? Why is the EU choosing one particular business model over another and suggesting that all business models should work the same way?

Now, I know that there have been lots of complaints about how much YouTube pays -- just as there have been lots of complaints about how much Spotify pays. And I'm not sure how telling these companies how they have to run their business fixes any of that. Because, at the same time, I know of artists who say that they've only become successful because of YouTube or because of Spotify. They're pretty happy with how those systems work. Why should the EU government suddenly come in and say "this model is okay -- this model is not"?

Mandating business models and worrying that one business decision makes it more difficult to compete -- and thinking that's a regulatory issue -- doesn't seem like a good way to encourage startups and innovation in Europe. It sounds like a massive headache for any platform -- especially smaller ones -- operating in Europe.
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Filed Under: andrus ansip, digital single market, eu, gunther oettinger, platforms, regulations
Companies: google, spotify, youtube

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  1. icon
    That Anonymous Coward (profile), 18 Apr 2016 @ 11:04am

    We compared apples to oranges and have decided that moving forward all apples should have peels and segments like oranges so they can be fairly shared.

    In the broadest terms Spotify and YouTube are both platforms that deliver content. But in practice they operate much differently, and the income streams each earns is very different.

    If a music video goes out on YouTube for a popular song it might get some hits, where users of Spotify might make it the stream of the moment that they have in heavy rotation. Based on the different deals the payments go out, and considering the labels/artists aren't expected to pay for the resources they are using on either platform, its a pretty good deal.

    The larger problem seems to be twofold
    1 - Google is the internet
    2 - Google makes a bunch of money, and there is only 1 pot of money so anything they are getting is taken away from someone else. (Usually the poor poor artists the cartels like to unshackle and parade around before locking them away again to cash their royalty checks of $.15 after costs are deducted.)

    Each platform is different, and part of that is an industry and regulation (purchases by the industry) that makes everything a fight and slog to get to selling something to consumers. If they wanted everyone to pay the same, they should regulate the copyright laws and set 1 flat price for all platforms and work from there. That way the 'fight' over wanting 11 cents for every dime the platform makes (h/t Mike) are over.

    If every platform knew what the costs where, and didn't have to worry about decade long pointless lawsuits you might get an EU based competitor who can challenge the big players... but serving the cartels interests benefits no one because their demands are so far removed form reality.

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