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Business News Digital Labels & Publishers Legal
PRS and YouTube meet, the industry comments
By CMU Editorial | Published on Wednesday 11 March 2009
Executives from both YouTube and publishing royalty society PRS For Music met in London yesterday to discuss the former’s decision to block access to music videos in the UK in protest at the latter’s demands regarding future royalty payments.
As previously reported, Google-owned YouTube announced on Monday that it was removing “premium music videos” from its UK site this week because its talks with PRS, who represent British songwriters and music publishers, regarding a renewal of the video site’s music licence had faltered.
YouTube claim PRS are pushing for more money, and that their demands are just not commercially viable – ie possible advertising revenues would never be enough to pay PRS’s proposed rate. PRS argue that YouTube are using the licence renewal to try and pay less money, while adding that they are basing their royalty demands on rates set by the UK Copyright Tribunal on digital royalties.
It’s thought that money isn’t the only sticking point, with reports that YouTube want PRS to provide it with details of its members and their catalogues, with a view to paying songwriters and publishers directly. PRS prefer it for YouTube to pass over viewing stats and a cheque so they can distribute the money to their members. Both sides reportedly claim the other side’s unwillingness to share data and contacts amounts to a lack of transparency.
Interestingly, YouTube’s decision to pull music videos from its UK website seemed to come as a surprise to PRS, who told reporters that talks between the two companies were ongoing and that they had, at no point, asked for content to be removed. Therefore YouTube’s decision to block access to pop promos in the UK can only really be seen as an attempt to put pressure on PRS to come down in price.
PRS were quite strong in their criticism of YouTube’s tactics yesterday, urging the video site to reverse its decision to block access to music videos. YouTube refused and continued with the blockade. Nevertheless, reps from both sides met yesterday afternoon to further discuss the situation and possible compromises on royalty rates.
After those talks, PRS issued this slightly non-commital statement: “Talks between PRS For Music and Google took place today to discuss the licensing of YouTube following Google’s sudden decision to block premium video content on the service in the UK. The meeting was positive. We are committed to ensuring our 60,000 songwriter and composers members receive a fair deal and that UK consumers continue to enjoy music videos on YouTube”.
As YouTube and PRS continued to talk, others in the industry began to comment on the former’s video blocking decision. The record companies, who co-own the blocked videos and most of whom have live licensing agreements with YouTube, have remained quiet on the issue, despite the decision potentially directly hitting their own digital revenues. The music publisher and songwriting communities who PRS represent did comment though, most speaking up for their collecting society.
Representing the music publishers, the UK’s Music Publishers Association told reporters: “This action is particularly disappointing in light of the landmark deal agreed between PRS and YouTube in August 2007. That deal, brokered with the assistance of the MPA representing the UK’s music publishers, was a pragmatic licensing solution, enabling YouTube to provide copyright content whilst providing the songwriters and publishers a fair return for their creativity and investment”.
Speaking with his songwriter hat on, Billy Bragg meanwhile told the Times that “Google, YouTube’s owner, is a company that makes billions in profits; we think they should be paying artist royalties from the advertising revenue they make”.
And within the digital service provider sector too there was some support for PRS’s standpoint. The boss of Dublin based online music video service MUZU, Mark French, said that YouTube’s arguments that PRS’s royalty demands were not commercially viable did not necessarily mean the collecting society was being unreasonable, there’s always a chance that the problem is with Google’s business model. He said that because official music content is bundled in with cheap and often low quality user-generated content on YouTube, Google had to charge lower advertising rates, and that’s why they can’t afford to pay the kind of royalties PRS are talking about.
He told reporters: “It’s not the music industry’s fault that YouTube’s business model doesn’t stack up. The model doesn’t support paying the current PRS rates let alone the payment to artists, because they cannot command high enough advertising rates. Because sites like YouTube are built off the back of user generated content, and have a storied past of allowing ‘illegal’ content to be viewed – brands are resistant to pay premium advertising rates. MUZU.TV was purpose built for the music industry with a viable model that protects the CPM (cost per thousand) by its 100% focus on premium music content. While the industry needs to look at the minimum stream rates to make new business models viable and sustainable it should not let YouTube hold it to ransom”.
However, others in the digital media domain were less keen to talk down their competitors, presumably because they too are struggling to make their business models work with the royalty rates the collecting society ultimately demands. US-streaming service Pandora has already left the UK market, of course, after failing to reach a deal with PRS, and as news of the YouTube video blockade spread there were rumours that a similar dispute between MySpace and the collecting society was stopping the social networking company from launching their new expanded streaming music service, which launched in the US last year, over here.
Meanwhile the co-founder of a UK-based streaming music service, Last.fm’s Martin Stiksel, while not going all out to diss PRS, did express sympathy for Google’s situation and confirmed online royalties are a big issue for all digital music providers. He told the BBC: “It has been a bold decision for Google but we are all working in a very competitive environment and the fees need to reflect that. It is a fundamental problem that we have been facing in that online music licensing is getting more complicated and more expensive”.
He added that the UK radio sector, who have had their own protracted disputes with the likes of PRS over the years, now had a much better deal than that being offered to online service providers like Last.fm and YouTube, and that content owners needed to consider arrangements more like those offered to terrestrial radio stations. He added: “We pay each time one user listens to a song or watches a clip and, while that is more accurate because it makes sure the more popular songs get paid more, it is also very expensive. Terrestrial radio pays a fixed minimum and that works out a lot cheaper. We have to find commercially workable rates otherwise illegal services will win and take over”.
Concluding, Stiksel added a sentiment expressed by all sides – neither music firms nor web providers benefit from content blockades like the one instigated by YouTube, because it pushes users towards illegal unlicensed services where no one wins. PRS added last night that “PRS and Google are due to meet again over the next few days”. Whether that means a quick resolution to this can be reached remains to be seen.
