YouTube have announced that they will block access to music videos for UK viewers due to a dispute over licensing terms with UK collection society PRS for Music (formerly known as the MCPS-PRS Alliance).
This is the almost inevitable result of two long-term strategic courses which have ultimately been on collision path:
- On the one hand you have PRS becoming increasingly assertive of its remit and licensing position, right from the level of policing small business performance licenses. PRS sees a digital world in which numerous start ups build their businesses around music but that publisher and performance rights seem to be much further down the agenda than record label rights.
- On the other hand you have Google still desperately trying to figure out how to make YouTube ‘work’ as a business. More effective innovation in video advertising is needed on the one hand, whilst better relationships with content owners are needed on the other. Ever since Google bought YouTube, numerous content owners have come in for their share of the pie. In many instances unsatisfactory licensing negotiations have seen content owners opting to take legal action against YouTube instead (e.g. Viacom, The English Premier League etc). Others have started playing hard ball by other means (e.g. Warner pulling their music videos). With revenue from advertising needing to grow more strongly, YouTube can only cede so much ground in rights negotiating and also needs to be seen not to be a soft touch. Otherwise all content owners will seek aggressively better terms.
So with both parties set to fiercely fight their corner, a conflict was always a strong possibility. The action does have the air of a PR stunt about it and certainly ensures that dirty laundry is now washed in full public gaze. PRS’s Steve Porter said
This action has been taken without any consultation with PRS for Music and in the middle of negotiations between the two parties
Whilst YouTube’s Patrick Walker said
[PRS was seeking a rise in fees] “many, many factors” higher than the previous agreement.
UK consumers needn’t worry too much. The music videos will be back. Once the grandstanding is over both parties will hit upon a compromise. Music video is too important to YouTube not to reach an agreement, just as YouTube is too important a revenue stream for PRS. Until they do UK music fans have plenty of alternatives, such as Daily Motion and of course file sharing networks. And there’s very strong reason why the labels, PRS and even YouTube don’t want YouTube’s loss to be Bit Torrent’s gain.
EDIT: One very important additional element I missed off has just been pointed out to me: Google are also arguing that PRS cannot give them an exhaustive list of which artists they represent. Historically this would have just been because of the many very small artists, often without label deals. But now, with some major publishers withdrawing their online rights the publisher collection market is becoming highligh fragmented. This raises the stakes for PRS and may well be an astute negotiating tactic for Google. If push came to shove PRS would probably sacrifice significantly higher rates in favour quoshing the dispute over catalogue reach. If they don’t their position as a one stop licensing body will be weakened.