Google’s contract for indies leaked

Music tech blog Digital Music News has published in full the contract Google has insisted indie labels sign for its upcoming YouTube streaming service.

The example contract reveals that, under the terms of the published version of the contract, indies must agree to never take legal action against Google – under a “Covenant Not To Sue”.

It also demands labels give immunity to users who upload their content to YouTube’s video service.

Furthermore, the contract requires to give up the practice of ‘windowing’ whereby it will make content available exclusively (for a given time frame) to another digital outlet – iTunes, for example. This has been common practice among most labels in recent times where new material will be released on stores such as iTunes for a week before going on general release. Adele and the Black Keys have both used the marketing tactic.

In another shocking move, Google insists that royalty payments across all labels will be reduced in accordance with the slashing of rates at any other label. Therefore, should a major agree with Google to cut payments by 10%, for example, all other labels will be forced to follow suit.

“To the extent that any major label agrees to any rates for the Google Services that are lower than the rates set forth in Exhibits C or D, including with respect to bundling, Google will have the right to reduce Provider’s analogous rates accordingly, following thirty (30) days written notice (via email will be sufficient) to Provider,” it states.

According to a source who spoke to tech website The Register, “One legal source familiar with digital music contracts claimed the terms amount to a restraint of trade.”