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YouTube vs. Spotify? ‘There Is No Moral Equivalency,’ Says Trade Org A2IM in Rebuttal to Lyor Cohen (EXCLUSIVE)

Reactions to YouTube global head of music Lyor Cohen’s Aug. 17 blog post defending the video giant’s payouts to content owners continue to come in. Cohen’s stance — that the service  is paying out about $3 per 1000 ad-supported streams in the U.S., which he claimed was more than other ad-supported streaming services — was criticized vehemently by the Recording Industry Association of America (RIAA) and veteran manager and Global Music Rights chief Irving Azoff. Now, A2IM (American Association of Independent Music) CEO Richard James Burgess has outlined the industry trade organization’s position.

While Cohen’s remarks took a clear jab at competitor Spotify, Burgess notes that there is an important distinction between YouTube and a streaming service like Spotify. “There is absolutely no moral equivalency between Spotify and YouTube,” he writes. “Spotify committed to pay creators every time they play their music. YouTube chooses when they will pay, what they will pay, and the circumstances under which they will pay.”

Another difference Burgess points out is the value gap between a video and audio stream. “A video stream is a more valuable usage than a pure audio stream and a more expensive product for creators to produce. YouTube is not even paying as much as the audio streaming services when, because it is offering more functionality and a more expensive product, it should be paying more.”

Read Burgess’ rebuttal to Cohen in its entirety below:

I applaud and second Cary Sherman’s “Five Stubborn Truths…” response as well as Irving Azoff and David Israelite’s later comments. Here is an independent label perspective.

Dear Lyor,

Many of us hope that you will be able to change the culture at YouTube to become more artist friendly and transparent. We understand that it takes time to shift corporate culture especially one as established as Google’s. Unfortunately, there are some entrenched alternative facts that are repeatedly regurgitated by YouTube and need to be corrected.

In comparing YouTube streams to Spotify streams, it is important to note that there is absolutely no moral equivalency between Spotify and YouTube. Spotify committed to pay creators every time they play their music. YouTube chooses when they will pay, what they will pay, and the circumstances under which they will pay. This is a fundamental distinction between YouTube and Spotify. Spotify pays for every music audio stream globally, and gives our members the right to decide what they make available on the platform. Whereas, the majority of YouTube’s global music video streams, including vast amounts of UGC (which is difficult and onerous to manage), are given away for free, with no advertising served against them. No payment for those streams goes to artists or labels.

YouTube is a global company. It is possible that some carefully selected YouTube streams in the U.S. pay as much as your $3/1000 although no information we have seen indicates a rate even close to that. Whatever the reason for that, what’s important to artists and labels is the overall revenue for music usage that they receive. If we care about artists we want a healthy environment for streaming services. We cannot have a healthy streaming environment when other services are forced to compete with YouTube’s free video streams and lower cost basis. Additionally, it makes no sense for YouTube to boast about being a global platform and then cite a high per stream rate based on a limited subset of data from only the USA; the most mature online advertising market.

Information from our members shows that two out of three (66%) YouTube music video streams, worldwide, are un-monetized. For every one that has an ad, two do not. Let’s address your ” lower contributions in developing markets comment,” The Dow Jones and the FTSE consider Australia, Belgium, France, Italy, Spain, and the Netherlands as developed markets, yet YouTube is delivering far lower revenues than other services in those markets. On the other hand, Brazil is not on the Dow or the FTSE’s lists of developed markets but some sources are seeing significant audio streaming revenue from Brazil. Not so with YouTube. YouTube’s low payments are not a “developing markets” issue they are the consequence of a commercial commitment to supply other people’s copyrights at no charge to as many consumers as possible.

Content ID and the Safe Harbor:
Content ID may be technologically capable of tracking unauthorized usage but, if so, it is not being applied adequately. We have brought this to YouTube’s attention repeatedly and the response is always a robotic, “Content ID is 99.5% effective.” Apparently not. Forty-six percent of A2IM labels surveyed, report being infringed weekly, 68% saw infringing copies reappear on the same service, and 77% percent cite lack of resources as the main obstacles to removing music from unauthorized services. The latter being because of the arcane bureaucratic processes of the notice and takedown system and the fact that infringing copies pop right back up — if they ever come down. We have asked for notice and stay-down to no avail. YouTube has the technological capability to make this happen but chooses not to do so.

Artists and labels need the ability to control what content goes up and when. If unauthorized music is posted they need simpler notification systems and the infringing titles should come down quickly and stay down for good. Shifting control from YouTube back to the rights holder is simply the right thing to do. Creators should have control over the use of their work.

Regarding your comments on transparency:
We agree, YouTube needs to instigate some semblance of transparency for labels, artists, songwriters, and publishers.

Fame and Fortune:
Sadly, the attraction of fame, is exactly how many artists get enticed into unsustainable situations. For some, fame may be a stepping stone to fortune. Nevertheless, artists, whose music is used, deserve to make a living commensurate with the level of usage. They should not need to become household names to do so. If YouTube paid a fair market royalty for all streams, more artists would be able to develop careers and sustain themselves. If YouTube is somehow making money based upon the use of recorded music, the creators should be paid their fair share of those revenues.

Something that we don’t talk about much:
A video stream is a more valuable usage than a pure audio stream and a more expensive product for creators to produce. YouTube is not even paying as much as the audio streaming services when, because it is offering more functionality and a more expensive product, it should be paying more.

Move to subscription:
I appreciate your comment that “YouTube must prove its credibility when it comes to its ability to shepherd their funnel of users into paid subscriptions.” However, with ad supported streaming on YouTube supplying free usage with few limitations, there is little incentive for users to upgrade. By contrast, ad supported streaming on Spotify’s mobile app is not even an on-demand experience. We support the development of YouTube Red and we understand the concept of an acquisition funnel. A meaningful first step would be to increase the functionality distinctions between the ad-supported/free and subscription service. Let’s also not forget that, as mentioned, many of YouTube’s streams are not even ad-supported, they are free.

In closing, and reflecting on your closing comments about “bringing artists and fans together to make magic happen.” This is undeniably something you have done many times. What we also need to ensure is that–along with the magic–artists, songwriters, and the businesses that support them can get their fair share of monies generated by their creativity. And, it is ultimately our responsibility to do everything we can to generate the most money possible for those creators.

Richard James Burgess
CEO A2IM (American Association of Independent Music)

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