Youtube will remove UK music videos, no agreement with PRS - when will they ever learn??

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The UK / EU web is buzzing with the news that Youtube (Google) has started to block or remove UK music videos because they have not been able to strike a new music licensing deal with the PRS-For-Music, the UK rights society which represents the songwriters and the publishers. I particularly like the coverage of this issue by TelecomTV.com, here, but a lot more links to other coverage can be found below.

As is my habit, at times, I want to quote and comment. Before I get started, though, I want to point that obviously I don't know the terms of the license that were suggested by either Youtube or the PRS, so therefore I cannot comment on whether either one of them is realistic or not. I just know from my own experiences (among many others, with the now defunct - RIP - Sonific) and from many other deals that I have observed, that very often the respective proposals are 20-50x apart, i.e. one party may suggest 1 cent per stream while the other party wants 20-50 cents - mostly, simply because they can; after all, the rights holders enjoy the protection of having the exclusive rights to license their songs. I would not be surprised if that was the case, here (my exact guess is something like 10:1)

Anyway, here we go, from TelecomTV.com "Yesterday YouTube  announced that it was going to take down all the premium music content currently available to UK YouTube users because it had failed to hammer out a new licensing deal with the UK's Performing Rights Society (PRS) for Music, a notoriously hard-line royalty collector. YouTube said the PRS wanted more royalty payment for each video view than YouTube could ever make from the ads situated next to each"

My comment: this points to the root of the problem, right away. Any deal between the mighty Google and the still-trying-to-find-the-right-$-model Youtube and the rights-holders' representatives has to be about sharing the revenues that are actually achievable, in the market, here and today, and jointly building a system that can generate more and more revenues, tomorrow and beyond. Again, as Larry Lessig says, and as I have proudly annexed from him, it's about Compensation Not Control!  To the PRS: NO, you cannot have both - and it looks like you just decided against Compensation???

Unfortunately, this detrimental mindset has become a default seeting: many if not most of the rights societies in the so-called developing world, and now apparently the PRS, too, have adopted one of these 2 strategies: a) if a potential licensee is still too small and economically insignificant to warrant their consideration, they will not offer any license at all, unless it neatly fits one of the existing templates b) if a potential licensee is large, juicy, popular and financially connected to an entity that seems to have verrrrry big pockets (see Last.fm, Myspace, Youtube, Facebook... maybe), they will ask for the moon and try take them to the cleaners. Even better if that entity has been previously in-breach of the existing licensing traditions and regulations - more leverage is always a good thing, right? Just study the mind-boggling story of my favorite web-radio service, Pandora. Never mind that this kind of 'it's my right and I will fully exploit it as I see fit' - thinking is also pretty much what has gotten us into this horrible economic crisis, as well - but that's another story.

None of this has anything to do with real, honest and open intention of building a mutually beneficial and future-oriented model, and everything to do with what I like to call Economic Egoism that is effectively set in stone i.e. law by some outmoded laws from over 20 years ago. As long as rights organizations -whose tasks it is to license music not to forbid its use - are pursuing this strategy we will not get to a point of 'peace' with all those new entities that clearly want to use, and pay for their music.

The PRS published a very revealing statement when Youtube announced their decision to play hard-ball and remove the music videos - here is the nugget: "Google had revenues of $5.7bn in the last quarter of 2008". What does that have to do with negotiating the fair and equitable licensing rates for music? PaidContent.org has some great comments on this issue, interviewing YouTuber Patrick Walker, including this one:  "to suggest that, because Google’s a big company, we should just suck it and pay a ridiculous rate is not something that we’re going to stand by...it’s hard for new models to emerge when the starting point is a massive loss on a per-stream basis".

In fact, I believe that this kind of attitude from rights organizations, publishers and record labels will most certainly lead to government  intervention, sooner rather than later, since a dysfunctional market is not good for anyone - and clearly, this is what we have now, and it appears to be here to stay. I think... I have said it before:)

So here is my message to the PRSForMusic (as they are now called) and their members (hopefully they have a say in this, too): pleasssse get off this bizarre and decidedly Web 0.0 idea that Google should now be paying for everything that you think has been 'stolen' from you on the Internet. Instead, give YouTube a flexible, open, transparent and realistic license that gives everyone room and time to MUTUALLY develop this model, going forward. There is nothing to be gained by refusal! Start to cooperate rather than to try to dominate these conversations. COMPENSATION NOT CONTROL. And do it now, or have somebody else force you to.

More: Techdirt's ueber-brain Mike Masnick comments:  Google has simply pulled music videos down in the UK. Basically, Google is making the point to PRS: you need us much more than we need you". The UK Telegraph has a few nice quotes (even though I don't agree with their conclusion that Youtube has a lot more to lose than the songwriters)

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Comments

[tdf]

Hopefully YouTube's actions will go some way towards raising public awareness of the monopoly that PRS has in the UK.

Take a look at this recent BBC article on PRS and how its licensing rules affect some small UK businesses:
http://news.bbc.co.uk/1/hi/magazine/7833982.stm

[Wells Baum]

Warner backs out, Universal makes exclusive deal. What is Youtube's strategy when it has to split high CPMs with these major content creators?

[Gerd Leonhard]

Robert - WHICH high CPMs? They don't exist yet. ~All the major labels will need to agree to cooperate with Youtube in such a way that these values can be CREATED together. Google and / or Youtube or not the major labels or publishers cash cows - money needs to be generated together. And way beyond CPM - check out what I write about Advertising 2.0 > sidebar, category link