Formal process over YouTube dispute underway in Brussels

Just over a week since IMPALA lodged an anti-trust complaint with the European Commission over YouTube’s strongarm approach to licensing independent labels, the UK indie trade body has confirmed formal proceedings have begun in Belgium’s capital.

IMPALA, along with a 19 global independent associations including AIR, believe the Google-owned video-sharing site breaches five European competition rules of conduct as it readies its upcoming music subscription service.

Although the five specific breaches weren’t announced in a statement made by IMPALA Executive Chair Helen Smith, an example contract issued to indies was leaked early last week; under the terms of the published version, Google demands labels give immunity to users who upload their content to YouTube’s video service, give up the practice of ‘windowing’ whereby it will make content available exclusively (for a given time frame) to another digital outlet, and that royalty payments across all labels will be reduced in accordance with the slashing of rates at any other label (most likely a major).

For these reasons alone it’s believed Google is using YouTube’s position as a digital gatekeeper to create barriers to accessing the digital market. IMPALA and US trade body A2IM have both lodged complaints; among the requests is plea for an order that YouTube cannot enforce contracts already signed and a red card to stop YouTube’s conduct.

Helen Smith said in a statement: “The formal process has started in Brussels where the European Commission has consistently shown it will take a stance to ensure its competition rules are properly respected. Commissioner Almunia has already underlined the importance of the contribution made by independent music companies.

“This is a crucial moment for the development of the online music market with European services leading the charge. What kind of legacy will Europe give those companies? How does Europe want its artists and consumers to be treated? We look to Commissioner Almunia to take urgent action. It’s red card time.”

The European Commission’s incumbent Competition Commissioner and antitrust enforcer, Joaquín Almunia, has already accused Google of abusing its place in the adverting business. He penned a six-page letter to his commission colleagues suggesting they investigate Google’s “many allegations, the various practices that they cover, and the new types of markets that are affected.”

If fined for the breaches of conduct by the EC, YouTube could face a fine of up to 10% of its turnover worldwide.

The news follows YouTube’s unveiling of upcoming features on its blog. The biggest announcement is the planned introduction of integrated crowdfunding, titled YouTube Fan Funding, where fans of YouTube content creators can donate money to support their favourite channels.