Music industry demands changes to world's largest streaming channel to compensate for intellectual property use.
The music industry is abuzz about The New York Times’ Tuesday article on the battle between pop stars and Google over YouTube royalties in the future.
At the center of the battle: YouTube royalty compensation for intellectual property that can be streamed by one billion users.
As the Times explains, musicians are demanding changes to a 1998 federal law that protects YouTube and similar sites from financial responsibility if their users upload copyrighted materials that don’t belong to them.
Musicians argue that the Digital Millennium Copyright Act is outdated. They say that it’s too difficult to remove copyright-protected content from the site. Most important, they say that they’re not receiving compensation for what is legally theirs.
That is setting up quite a battle in the future.
The Issue with YouTube Royalties
Every time that a song is downloaded, streamed,and purchased, or played on the radio, royalty rights holders receive compensation based on their contracts.
That song you listened to in the gym on Spotify—a singer received a royalty payment.
That tune on the car radio on the way to work—the songwriter and producer received a check.
Now, hop over to YouTube and type in your favorite song. There’s a strong possibility that one of the search results produces an unauthorized upload of that user's content.
The New York Times article hints that there are big changes coming. Over the last few years, music companies and star performers have demanded and yielded much greater royalty payments for the authorized streaming and sharing of their music.
The YouTube royalties issue just happens to be the 900-pound gorilla in the room. The website generates more than 40% of all music consumption in the United States, but it offers just 4% of the royalties paid out. Unauthorized streaming is perhaps best displayed in the rampant proliferation of uploads of Taylor Swift's album “1989,” which was released two years ago.
Universal Music had to devote a full team of employees to monitor YouTube for uploads, and re-loads of copyright protected content. The production company said that it issued roughly 66,000 notices to several sites regarding copyright infringement. Meanwhile, it issued 114,000 automatic blocks to the Content ID feature of YouTube, which allows artists and royalty rights holders to monitor the use of their music.
The problems accelerate for independent artists who lack that sort of muscle. As the Times explains, Grammy-winning jazz artist Maria Schneider lacks access to Content ID and says that the DMCA doesn't create legal incentives for YouTube and other sites to remove unauthorized digital content.
That's why a lobbying battle is brewing, one that will put YouTube royalties at the center of the debate. Musicians, recording houses, anyone with skin in the game is expected to make a push for changes to how content is managed, how copyright laws operate in a 21st century economy, and what fair royalty payments that artists and their producers and writers can anticipate.
The music industry is uniting to change the way that billions in royalty payments will be offered to musicians, songwriters, and anyone with a financial interest in the long-term performance of the music industry.
In fact, even a small shift in copyright laws or alterations to licensing agreements with YouTube is going to unleash a massive financial bonanza in the form of royalty payments.
The best way to get your share is to learn more about the royalty payment process and why it is part of one of the most exciting alternative asset classes in the market today.