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This week the rather strange news came to light that due to a change in service terms at YouTube they would be banning music videos from certain independent labels. These include Domino and XL, who amongst others are responsible for the likes of some of the biggest break out, independent acts of the last decade, including Adele and the Arctic Monkeys. The reason for all this? Youtube is throwing it's hat into the ever increasing pool of streaming services and according to the indpendent labels, has drastically undervalued the amount of royalties that they need to pay.
As a service YouTube operates as an extension of the largest search engine in the world, Google really does hold the keys to the internet. For example the recent European ruling allowing people to edit themselves online, doesn't remove the materials, it merely blocks them from the search engine making them undiscoverable. Meaning that being excluded from Youtube is a very real and palpable threat to the promotional distribution of the independent labels. As far as competition goes, there really isn't any, while we have Vimeo and Dailymotion, they are a drop in the ocean compared to the reach and accessibility of YouTube. As such, threatening to shut these labels out, looks more like a company obtaining leverage than entering negotiations.
Even more disturbing is the fact that there is some extremely aggressive hyperbole emanating from YouTube's camp. In a recent interview with the Financial Times, YouTube's head of content Robert Kyncl, said that they would begin blocking videos from the dissenting independents within a "matter of days". There is a sense of urgency to this that undeniably reads like a threat, one that comes from a company with a market share that could easily be read more in terms of a stranglehold. “While we wish that we had a 100 per cent success rate," he went on "we understand that is not likely an achievable goal and therefore it is our responsibility to our users and the industry to launch the enhanced music experience.” This in turn suggests that the terms the company are presenting are set in stone and that holding out for a better deal is a futile pursuit.
Watch the Arctic Monkeys 'Snap Out of It' video while you still can below
Kyncl also insists that YouTube are "paying them fairly and consistently with the industry,” while this may or may not be true, it misses the underlying agenda. The real issue that lies at the heart of the dispute is that YouTube's streaming functionality will also offer a free service. For a company with the dominance and influence of Google this has huge potential to undermine the willingness of the consumer to pay subscription fees. With Deezer, Spotify and Beats currently operating on a £9.99 a month model, a fall in subscriptions is very likely to follow, leaving music in general and the the services severely devalued, regardless of royalties.
In retaliation XL, Domino and the others have launched an enquiry with Impala (a legal watchdog for independent labels), in order to discover whether Google is abusing it's market share to force them to agree to unfavourable terms. What is undeniable however is the power that Google has, the aggressive nature of the negotiations so far and that this is all the result of streaming services becoming a highly competitive market.
Google is one of the biggest companies in the world and right now they are preparing to enter and dominate another branch of the internet that has opened up in the form of streaming. It's a shame the independent labels have to take a hit in the process however, especially in the face of a company is constantly making money hand over fist despite proclaiming utilatarian values. Remember iTunes vs. Realplayer? Well this is round 2...
