YouTube: Music Biz Generates Half Its Revenue on the Site From Copyright-Identification System

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Courtesy of YouTube

The music industry has been complaining that YouTube doesn’t do enough to combat piracy. But Google says record labels are making millions from YouTube’s Content ID copyright-detection system, and that the process is used 50 times more frequently than DMCA takedown notices.

In a report released Wednesday, “How Google Fights Piracy,” the Internet giant says that when music companies find copyrighted material they own on YouTube with Content ID, they choose to monetize more than 95% of those claims by opting to leave the content up on the platform to generate advertising (rather than blocking it). Indeed, 50% of the music industry’s YouTube revenue comes from fan content claimed via Content ID, according to Google; to date, YouTube has paid record companies more than $3 billion.

Overall, YouTube has now generated over $2 billion to copyright holders by monetizing user-uploaded content through Content ID — with about $1 billion of that in the past year alone.

Last month, about 160 artists including Taylor Swift, U2, Paul McCartney and Katy Perry signed on to the music industry’s campaign to urge U.S. lawmakers to reform the Digital Millennium Copyright Act, saying the law is outdated and puts excessive burden on copyright owners to police their work. YouTube is clearly the big target in the lobbying effort, and music execs and artists have also criticized the Internet-video giant for not paying fair royalty rates (charges that they have previously leveled against Spotify and Pandora).

Google claims some 8,000 copyright owners, including record labels, are now using YouTube’s Content ID system to track their content — in a far more effective way than using a DMCA-based process. About 98% of copyright management on YouTube takes place through Content ID, with only 2% handled through DMCA copyright-removal notices.

“Content ID goes beyond a simple ‘notice-and-takedown’ system to provide a set of automated tools that empowers rightsholders to automatically claim their content and choose whether to track, block or monetize it on YouTube,” Katie Oyama, Google’s senior policy counsel, wrote in a blog post. She added, “Thanks to Content ID, YouTube is also the only platform that gives partners an automated way to directly monetize background/incidental use and (song) covers.”

YouTube, which launched Content ID back in 2007, says it has invested more than $60 million in the system to date. Originally an audio-only system, Content ID now detects video based on digital “fingerprints” and can even identify melodies in a piece of content. Content ID now houses more than 50 million reference files in its database.

“One of the most dynamic parts of our music ecosystem on YouTube are the tributes, backstage footage, remixes, mashups, and concert clips uploaded by fans,” Google says in the 2016 anti-piracy report. “Through Content ID and a combination of licenses with labels, publishers, and songwriters, rightsholders can allow creators to use copyrighted content to both celebrate their favorite music and unlock an additional source of revenue.”

Google’s report on how it fights piracy is an update to previous editions the company released on the topic in 2013 and 2014.

In another data point from the report, Google said in 2015 it received requests to remove 558 million URLs from its search engine under the DMCA, up 60% from the year before. It removed over 98% of those webpages, which means it rejected about complaints for about 11 million URLs that were determined to be incomplete or erroneous. The company said it responds to URL removal requests in less than 6 hours on average.

Google also claims it’s fighting piracy on the advertising front. Since 2012, it has blacklisted more than 91,000 sites from AdSense for violating copyright-infringement policies and terminated over 11,000 AdSense accounts for copyright violations. Between September 2015 and March 2016, Google rejected 670,000 ads submitted to its AdWords service on copyright-infringement grounds.