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No safe harbour talk in Warner negotiations, says YouTube’s Lyor Cohen

By Chris Cooke | Published on Tuesday 9 May 2017

Warner Music was keen to present its new deal with YouTube last week as the least-worst option available. But the actual talks between the two companies were much more positive than all that, says YouTube.

In a memo to staff confirming the new deal, Warner’s top man Steve Cooper stressed that the major had managed to limit the time-span covered by the new agreement so that it could push again for better terms in the relatively near future, and confirmed that the company’s ongoing support for wider music industry lobbying efforts to have safe harbour laws rewritten, so to force the Google site’s hand on royalties and such like.

However, former Warner Music exec and now YouTube music chief Lyon Cohen tells Recode that he was “surprised” by the tone of Cooper’s memo, saying that’s “not been the context or the tenor of the negotiations”.

Claiming that he “didn’t hear anything about safe harbour” during the new deal talks, Cohen says that the negotiations between Warner and YouTube focused on how the Google site can grow its subscription service Red – paid-for streaming generally being more lucrative for content owners – while also increasing advertising revenues in those markets where mass sign-ups to paid-for streams are unlikely in the short term.

Says Cohen: “I’ve been in the bunker with them, and I’ve been really impressed with how Steve and his team have been thinking about it. This deal is centred around their vision of helping us build a subscriptions business. And them encouraging us to build the advertising business. So this deal enables us to continue growing our subscriptions business around the world. And ultimately, the key to the industry – to them, to artists – is if we can identify those consumers that are most likely to be shepherded to a higher ARPU [average revenue per user], that would be great”.

The YouTube music boss goes on: “We’ve talked over and over and over again how our business – I still feel part of this business – is going to return to growth by subscription and advertising, living side by side one another. [We had] numerous conversations … about them helping us, enabling us, to run this horse and to be successful. Because they would like a company the size of Google, [with] the international breadth of the company, to get into the subscription business. I don’t think they want their revenues highly concentrated”.

Asked how he feels – as an ex-major label guy – about the ongoing and highly public tensions between the record companies and his current employer, Cohen insists: “I can tell you that I would not be at a company that doesn’t do three things: Respect artists, and labels, and be committed to building a subscriptions business where they could identify the most likely users to shepherd them to a higher ARPU, via subscription. Period”.

YouTube is willing to play ball and address some of the music industry’s concerns, he said. Referencing his former colleague, co-Chair of Warner’s Atlantic Records Group in the US, Julie Greenwald, he says: “When Julie found out I was getting this job, she said, ‘do me a favour, take the lowest-hanging fruit'” – that being the fact unofficial uploads of full albums to YouTube frequently ranked highly in searches on the platform.

Responding to that request, Cohen says that he flew to Zurich to meet the team who lead on YouTube’ rights management platform Content ID. “I was blown away [by this team]”, he says. “These were the world’s brightest, finest engineers. Young. Really young people. When I told them about the albums, they said, ‘yeah, they jumped over our Content ID by speeding up the tempo of the music, slightly. We’ve already got a solution for it'”.

“I had them walk me through the process”, Cohen goes on. “I felt so proud that I could really talk to people in the industry that had this feeling about Content ID, and finding bad actors, and confidently say, ‘we’ve got a team that is dedicated to fixing this’. The more we frustrate bad actors, the more we can stop cottage industries, they’re just going to give up, at a certain point. And I think the industry will feel really good about that”.

So there you go, everything’s fine everybody: YouTube is going to sell loads of subscriptions and Lyor’s fixing Content ID for everyone. Happy days. Oh, but editorial policies dictate that I end this story by reminding you all, safe harbours, safe harbours, safe harbours, value gap, value gap, value gap, FUCKING YOUTUBE. Thank you.