Indie Labels Face YouTube Block Over Unsigned New Terms For Paid Service

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Looks like YouTube is turning up the heat in its ongoing fight with independent music labels, and some of the most popular artists on the platform. The FT is reporting that Google’s online video portal is planning to start taking down content from artists like Adele, the Arctic Monkeys and thousands of others represented by independent labels, as those labels continue to hold out over new licensing terms that YouTube is putting in place ahead of a new, ad-free paid service that it is launching.

YouTube, meanwhile, has not revealed the terms of that service or when it might actually launch its paid tier. Originally planned for last year, it has reportedly faced at least two delays over design and integration issues. The idea is that YouTube will offer an ad-free service, for a fee, that will sit alongside its free, ad-supported service. It would compete against the likes of Spotify, which has also been building up a presence on the web to sit alongside its native apps.

Contacted by us for comment, Google did not address the complaints of the labels or the blocking threat directly, but rather pointed to the upcoming service:

“We’re always working on new ways for people to enjoy YouTube content across all screens, and on giving our partners more opportunities to reach their fans and generate revenue. We’ll be adding subscription-based features for music on YouTube with this in mind, and look forward to sharing them with music fans,” a Google spokesperson tells TechCrunch.

The FT quotes Robert Kyncl, YouTube’s head of content and business operations, saying that it will start to take down content “in a matter of days.”

Those labels that have yet to sign on to the terms represent some 10% of the music industry worldwide, the FT notes. Conversely, labels representing 90% of the industry, including the biggies Universal Music Group, Sony Music Entertainment and Warner Music, have all agreed to YouTube’s terms. (Note: It’s not clear if “industry” here is in reference to artists, or tracks or the revenues those artists and tracks produce.)

But those numbers do not tell the full story: Adele’s music, as just one example, is some of the most popular on the service.

Confusingly, it seems that the blocking would not necessarily make YouTube an Adele-free zone. Videos like “Rolling in the Deep,” attracting over 500 million views, comes to YouTube by way of Vevo, which does have a deal with YouTube in place, as well as direct deals with independent labels.

“To clarify, music videos from the indie labels and distributed by Vevo on YouTube will not be taken down,” a spokesperson from Vevo told TechCrunch. In all, a measure of how confusing the licensing and royalty game for online content can potentially be. It seems like what would be affected would be other videos on the site, such as this recording of her singing “Someone Like You” live at the Brit Awards in London.

The complaint from independent labels seems to center on how much YouTube is willing to pay labels under the new service terms for streams of music that are free. The labels have been concerned that YouTube is giving more royalty weight to music played in the paid tier, and therefore offering less of a payout for the free plays — but in reality YouTube will be adding more enhancements to the free tier to compete better against the Spotifies of the world. In the end, the vast majority of users will opt for the free tier, meaning that in the end the labels will make less from all paid services.

The labels have been plugging away at battling YouTube for a while now, with the trade organisation the Worldwide Independent Network, representing some 850 labels, filing a suit with the European Commission in May for the regulators to investigate the terms for anticompetitive behavior. We are reaching out for a response from those labels to Google’s blocking threat and will update this post as we learn more.

Post updated to note that Vevo videos of independent-label artists would not be included in a block.