RECORDING INDUSTRY BOSSES, CAUTIOUS ON “FRAGILE” RECOVERY, DECLARE WAR ON YOUTUBE “VALUE GAP”

Image: IFPI CEO Frances Moore (via Billboard)

With streaming revenues booming and good news around recorded music revenues after a decade and a half of losses, the major labels are turning their focus to the “value gap” – the huge discrepancy between the number of users accessing music via user-upload sites YouTube and the money being made off them.

User-upload sites including YouTube are conservatively estimated to have 900m users generating $553m back in revenue; in comparison, streaming’s 212m subscribers (including both paid and ad-supported) contributed over $3.9b.

With a recent report showing that one in three independent labels in the US doesn’t have the resources to pursue copyright infringement and takedown notices, the majors are fighting to close the legislative loopholes that allow YouTube to take a back seat in the fight against unauthorised use while maximising their revenues from advertising on infringing content.

“The whole music community is uniting in its effort to campaign for a legislative fix to the value gap and we are calling on policymakers to do this,” IFPI CEO Frances Moore said in the report. “For music to thrive in a digital world, there must be a fair digital marketplace.”

“YouTube is completely determined not to find a solution to the value gap,” Moore told TMN in a phone interview from IFPI’s London offices. “YouTube’s attitude is: users are uploading the content, so it is not liable. The music’s up there, and because the music’s up there, they put adverts against it, and make money from it, etc. If we want payment, then we take what they give us, and if we don’t want what they give us, then we should send them notices and they’ll take the content down… They see themselves as passive and neutral.”

Moore says YouTube and similar services are able to take this position due to safe harbours – the increasingly controversial provision in copyright laws across major markets including the US and Australia that allows providers and platforms to escape liability for hosting infringing content.

“The industry’s got nothing against YouTube. They just want YouTube to play the game, and operate in a fair marketplace… YouTube, performing properly with a license, which enables its users to operate in full security, etc, would be a great partner to have in a digital environment. But they’re not doing that at the moment, which is why we have to take this to the governments.

“There are many many services out there and the industry is embracing all types of services, and they’re really being very very creative and imaginative in how they embrace those services, and they’d like to do that with youTube as well, but It’s very difficult if you’ve got a service that just refuses to acknowledge your intellectual property, or refusing to take a license for your content.

“Basically, sorting the value gap will create an even playing field that would allow us to have a fair stab at sustaining the music industry.”

Moore echoed the comments of Universal’s EVP Digital Strategy, Michael Nash, who emphatically told journalists on a conference call last night that the industry was looking forward, not backward, in mapping a recovery. “We’re not trying to get back to where we were in 1990-wherever it was… Maybe it will be ten times more than that, maybe it will always be less than that, but at least it will be an an even playing field.”

Nash and Warner CEO, International and Global Commercial Services, Stu Bergen, described the recovery as fragile and in its early stages; however, they were also optimistic about the potential of new technology such as voice-activated smart speakers and systems, which are already driving new listening habits at home and in the car. The success of the recovery, Nash told journalists, will be “dependent on the harmonious convergence of media and technology”.

The report can be downloaded here.