YouTube settles with German music rights regulator
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BERLIN, GERMANY - SEPTEMBER 28: A visitor takes a picture by using a smartphone during the rehearsal of 'The One Grand Show' at Friedrichstadt-Palast on September 28, 2016 in Berlin, Germany. Photo by Christian Marquardt/Getty Images Israel

BERLIN, GERMANY - SEPTEMBER 28: A visitor takes a picture by using a smartphone during the rehearsal of 'The One Grand Show' at Friedrichstadt-Palast on September 28, 2016 in Berlin, Germany. Photo by Christian Marquardt/Getty Images Israel

But a larger fight with artists on royalties continues unabated

After a years-long battle with a European regulator, YouTube has changed its royalties’ policy so that its content will be more readily available in Germany. “Blocking banners” have been removed from thousands of previously inaccessible videos. With the EU moving to implement a European-wide rights regime for digital copyright protection, the precedent set may determine how the video streaming site will operate in the common market there.

The European Commission has been promising content producers favorable changes for years, and may succeed in pushing these through. Less likely, though, is that it will influence US law given the differences between EU and American copyright policies.

That said, the deal further places pressure on YouTube to reach a deal with recording artists who have intensified their criticism of the company’s royalties’ policy this year.

Seven years’ war

GEMA, the German industry organization, had for years blocked YouTube access for videos in protest over what it saw as inadequate compensation for the tens of thousands of German artists under its umbrella, as well as international artists, studios, and their estates active in Germany.

Though YouTube still performed strongly in the German market against native platforms like MyVideo, or international competitors like Dailymotion and Vimeo, it did not have the same reach it did elsewhere. According to a MyVideo-sponsored study in Open Data City, “roughly 62 per cent of the top 1,000 videos on YouTube [were] blocked in Germany” in 2013.

Credit: YouTube

Credit: YouTube

Under the new system, any videos using GEMA-represented artists’ tracks will have to display ads so as to generate revenue for the creators. In a statement posted online, YouTube said that, “more music will be available on YouTube in Germany,” billing the decision as a “win” for both GEMA and itself.

YouTube hopes to resist further pressure, and fears being forced to adopt a Spotify-like royalties’ system given how draining that system is for Spotify. Currently, Google pays about a third of what Spotify does in royalties, and also pays less than Apple Music, which faces its own bitter dispute with artists. This, though, is partly the result of its different business model and the fact it does not only stream music.

New European copyright offensive

The financial nuts and bolts of the deal have not yet been disclosed. What is known, based on statements made by GEMA to The New York Times, is that the royalties will be dealt with retroactively, going back at least 7 years. And, that new guidelines are in place to cover present and future royalties.

GEMA also added in an official statement the terms will apply to YouTube Red when it launches in Germany. However, it still noted, “There are still different legal positions held by YouTube and GEMA on the issue of whether YouTube or the uploaders are responsible for the licensing of the used musical works.” Despite this apparent cliffhanger, several lawsuits filed from 2012 to 2016 between Google, YouTube’s owner, and GEMA were dropped as a sign of goodwill — and the realization that some of those cases were ending in YouTube’s favor, perhaps forcing GEMA to accept what is essentially a “stop-gap” solution until a pan-European plan is finally hammered out.

At the same time, GEMA has secured another favorable agreement, with SoundCloud, on the question of royalties. As part of the International Copyright Enterprise (ICE) alongside Sweden’s music rights’ regulator, STIM, and the UK’s PRS for Music, Billboard reports that the 250,000-plus artists represented by the regulators will “be able to receive remuneration from SoundCloud” as part of a legal settlement between PRS and the audio streaming service.

YouTube under fire in US, too

The stakes for the singers, studios, and copyright holders are high as streaming now drives revenue increases in the music industry. Last year, reports IFPI, streaming revenue rose by 45.2% and accounted for most of the growth in overall sales worldwide. And according to Midia Research, YouTube’s updated 2015 royalties’ policy means that the potential losses for the industry stand at $755 million, though revenue to rights holders still rose from 2014, by 15 percent.

Credit: IFPI

Credit: IFPI

These agreements are part of a larger, global pushback against “safe harbor shields” applicability to YouTube. Such a policy “shields the likes of internet service providers (ISPs) that aren’t seeking to profit when a customer of theirs uploads a musician’s song to the web and potentially infringes copyright.” Artists argue that these laws deprive them of compensation.

The music industry in the US is also heavily lobbying against safe harbor shields. YouTube’s strict take down notice policies particularly galls the music industry since the take down notices are not applied in blanket cases like with GEMA, but on a video-by-video basis. YouTube counters that its Content ID system cost $60 million to build, has spent $3 billion in royalties to date, and its copy protections work 99.5% of the time.

Though protected by a more liberal fair use standard from lawsuits, big-name artists and labels including Metallica and Taylor Swift, alongside the Recording Industry Association of America and the Open Music Initiative, have rallied against YouTube royalties policy in the US.

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