+Comment Google has postponed its plan to block independent music companies who wouldn't agree to the terms of its proposed deal, the FT reports - but it isn’t clear for how long.
Small independent companies are refusing to sign new pro forma deals with Google, which has publicly said it will block their music videos from YouTube – an apparent breach of its existing contracts - if the indies refuse to sign new deals with an as-yet unannounced audio streaming service from YouTube.
Groups representing the smallest companies formally lodged a complaint last month with the EU’s competition authority asking Competition Commissioner Joaquín Almunia to investigate – and annul any contracts that have already been signed.
The FT says YouTube has “postponed” the blocks, which were threatened a month ago. Instead of attempting to negotiate with the indies’ licensing body Merlin, YouTube sent out pro forma contracts to independent labels with the threat that their flow of money from videos would be cut off if they refused to sign up. According to the complainants, the three majors have received "preferential" royalty terms and those deals were concluded 18 months ago.
Independent music sources described the terms as “suicidal”.
Under the new deals – one of which was seen by The Register here – indies must cede price discrimination and their freedom of distribution to Google: if they release a song on any service, the new YouTube service must also have it.
According to the version of the contract we've seen, indies must also accept what has been called permanent “least favoured nation” status in relation to the majors – and they must promise never to sue either Google, or a member of the public who illegally uploads the label’s music to YouTube. This, combined with the “safe harbour” provisions of acts like the DMCA, would theoretically ensure that YouTube continues to make money from the indies’ music whether or not they agree to sign on the dotted line.
Last month, outgoing Commissioner Almunia attempted to mollify other commissioners concerned by his cosy relationship with Google by promising his team would look into YouTube.
Ripping up existing contracts and blocking royalty payments (while continuing to host the material) would put it in breach of most competition laws anywhere in the world, given YouTube’s status as the world’s de facto (and free) jukebox. ®