YouTube might not be a free, unlimited song bank for much longer, if they make good on their threats to independent labels.
The Financial Times is reporting (paywall) that labels who don't want to sign up with Google's new music subscription service will be blocked from YouTube "in a matter of days," in the words of Google VP Robert Kyncl, head of content and business operations.
The company has already secured deals with Warner, Sony and Universal for its new music services, slated to launch later this year.
In an interview with NPR, Canadian Independent Music Association president Stuart Johnson says that the indies were offered a lower royalty rate (how much would be paid per listen) than the "Big Three." Even though the majors would inevitably get more money since their songs attract more views.
"There is no reason for us to, at this point, give to one player privileges that could jeopardize the market health as a whole. This pressure over the labels is insane and will lead nowhere, but to a delay in service launch,” says Johnson in a statement released by the Worldwide Independent Network.
Google says it wants to make a better, more profitable music experience for everyone. But it's sites like YouTube (albeit before Google bought it) that created this level playing field that has allowed independent music to flourish and network like never before. Everyone has the opportunity to be discovered. Major labels can spend money on marketing all they want, but the indies are still just a hyperlink away.
If Google goes through with this, then they're going against the democratizing principle of the Internet that they're supposedly (or at least were) champions of. By strong-arming indies into taking a worse per-play deal than the majors, they're trying to wedge the music industry into its pre-Napster era.
Kyncl told The Financial Times that "it is our responsibility to our users and the industry to launch the enhanced music experience." But these tactics will only chip away at the positive side of the music industry's big shakeup: that the unknowns can make it without wooing a major label. Under this Google music service agreement it appears that they could never hope to get the same royalties as the majors – even with the same number of views/listens.
Indies will just find somewhere else to put their content, and if Google makes good on its threat, then that's the choice they have to make.
Google is a media company, whether they want to admit it or not. But like the Huffington Post and other aggregators, they don't create much content themselves. You can keep Katy Perry, YouTube. I'll kindly follow the indies elsewhere.
UPDATE June 24: Digital Music News has posted the contract YouTube sent to indies in its entirety. Though it sheds light on how exactly majors will always get a better deal than indies, the threat to block non-compliant labels from YouTube isn't in the document. There's also no proof that any indies signed this exact version of the contract, though Google is saying they have 95 per cent of the industry on board.