Analysis The latest record industry middleman takes more than ever from the mouths of musicians, at least compared with the old record industry middleman.
Head of the recording industry trade group BPI Geoff Taylor says that video music consumption doubled, but revenue only rose by 0.5 per cent.
Taylor contrasted this with a 70 per cent increase in revenue from Apple and Spotify. His speech was the latest to highlight the “value gap” between what should be paid out for the music, and what actually ends up in the pockets of musicians, songwriters, performers, publishers and music investors.
The BPI boss yesterday told delegates at Canadian Music Week: “The rising flow of royalties that should be nurturing artists and labels has slowed to a trickle, as platforms that rely on safe harbours use consumer demand for our music to grow their own businesses at the expense of creators.”
YouTube is the world’s most popular music service, but it pays out the least. That’s because its owner Alphabet (aka Google) has been able to take advantage of a copyright loophole to squeeze rates down to a fraction of what Apple and Spotify pay out. The loophole allows Google to legitimately maintain what is ostensibly an illegal supply chain of uploaders: an ethically dubious option not available to other music services.
After praising YouTube for its “innovation” (what “innovation”? - ed) Taylor called for the safe harbour UGC loophole to be plugged and for Google and other players to commit to an ethical fair payments framework.
Much like the attempt to unionise Uber, getting Google to pay for material uploaded because of the UGC loophole looks the big labour challenge of the 21st Century. Spotify and Apple pay out up to 18 times the rate of what YouTube pays.
Estimating YouTube revenue and profits is not easy, as Google does not break out the figures. But ballpark estimates put revenues at around $4bn for 2015, with music consumption heading north of 35 per cent. (That figure was before last year's revamps).
Hand of God and the bureaucrats
Music’s value gap has received a sympathetic hearing in Brussels, we hear, which is mulling the traditional collectivist European solution to copyright whinges, involving levies and taxes. This is not popular in the more utilitarian UK/US tradition, where IP rights are stuff to be traded, and bureaucratic meddling in a market is regarded much like diving in Continental football.
If you con the referee in Serie A, author and Italianophile Tobias Jones once pointed out, you’re a popular hero. You’ve got away with an audacious swindle (cf. Maradona’s “Hand of God). But the same behaviour in British football is regarded not merely as cheating, but as a sign of a personal inadequacy. Some European copyright-holders regard extracting a concession out of the bureaucrats as a masterstroke, but in the UK this is thought of as a failure: you’ve failed as a businessman in the marketplace, so had to get a sop from the state - or in this case, the superstate.
Just as approaches in the copyright world vary, so do approaches in Silicon Valley, where tech companies are today’s middlemen. Not all Silicon Valley companies take the same ruthless approach as Google. Apple and Spotify have supported the industry’s attempts to level the playing field. And while Netflix may have been capable of breathtaking cynicism - playing hardball with ISP rankings as it lobbied (at arm’s length) for new laws that lowered its distribution costs, it has recognised the need to invest in content. Netflix has spent $12.6bn on either licensing or developing its own shows.
By contrast, YouTube is a business built on cat videos, the low quality threshold of teenagers, and a giant honking copyright loophole. Does this look sustainable to you? ®