YouTube has long been considered by many to be the big bad wolf of the music industry, largely because of the comparatively low royalties it pays on music streamed on its free platform, and because of the “safe harbor” laws that exempt it from policing unlicensed music on its site.
In its annual and mid-year reports, the global music industry collective International Federation of the Phonographic Industry calls the resulting “value gap” the single greatest threat to the health of the business. Article 13 of the European copyright directive, now under consideration by the European Parliament, would change many of those provisions, and YouTube and its parent company Google/Alphabet have mobilized substantial forces to oppose it.
Following a blog post by YouTube CEO Susan Wojcicki that stated the company paid significantly more in royalties to the music industry than calculations by the IFPI and other organizations — and also made the debatable claim that many songs with incomplete copyright information would be blocked from YouTube — on Tuesday YouTube Music chief Lyor Cohen (pictured above) posted an op-ed in Music Business Worldwide that doubled down on those claims, and also challenged record labels to reveal how YouTube’s royalties are distributed to artists (possibly implying that the labels are pocketing an undue share).
While several executives responded to the op-ed in Variety Tuesday, on Wednesday afternoon five major European music-industry trade organizations — the IFPI as well as ECSA (the European Composer and Songwriter Alliance), GESAC (comprised of authors’ societies from across the European Union, Iceland, Norway, and Switzerland), ICMP (a global music-publishing trade organization) and IMPALA (the European association of independent music companies) — fired off a strongly worded collective response titled “YouTube’s Fact Free Fear-Mongering,” which follows in full; details on Cohen and Wojcicki’s posts can be found here.
“YouTube’s campaign against Article 13 of the Copyright Directive shows a lack of respect for the EU democratic process of law making,” it reads. “The revisions to the Directive have been under discussion for over four years already and the three main institutions of the European Union have all given their position. The Commission, Council and Parliament have all reached the same conclusion, that there is a value gap, also referred to as a transfer of value, where user upload services are making vast sums of money on creators’ content uploaded by their users, but not paying the right holders who own that content fairly. The result is a serious distortion in the European digital market place which harms right holders, other digital services and citizens. To correct that situation, platforms like YouTube should have to take responsibility for the content they use and monetize, by fairly remunerating their creators and right holders.
“YouTube constantly refers menacingly to ‘unintended consequences’ if the Directive is adopted, and threatens to block content, instead of showing willingness to observe laws and fairly remunerate. In fact, the Directive will bring fairness. Fairness for all platforms by creating a level playing field where everyone is playing by the same rules and fairness for right holders who will be properly rewarded for their creative content. It’s in our interests to boost online creativity, not restrict it.
“Even though the clarifications proposed by the EU institutions may not be to YouTube’s liking, they will contribute to sustainable and balanced growth of the European digital markets ultimately to the benefit of all stakeholders in the digital value chain including citizens. Many thousands of international artists, authors, publishers, labels, managers, songwriters have urged the EU to find a solution to the value gap. YouTube’s eleventh-hour campaign of fact-free fear-mongering should be seen for what it is: an attempt to derail the EU democratic legislative process.”