YouTubeâs relationship with the music industry just got a little more testy.
Major record labels are preparing to hit back at a Google-funded report that touts the value of YouTube to the music industry, ridiculing the reportâs conclusion that YouTube boosts business for artists and their labels by giving them better exposure.
The beef is escalating as music labels are mounting legal challenges here and in Europe against so-called âsafe harborâ provisions in copyright laws that donât hold Web-based platforms like YouTube liable for infringing content thatâs posted by third parties on their sites.
In YouTubeâs defense, its owner, Google, backed a 104-page study from UK-based consultant RBB Economics called âValue of YouTube to the Music Industry.â
The report, obtained by The Post on Thursday, claims that without YouTube, 85 percent of its users would be headed to lower-paying services.
âItâs hard to even understand which services are even available that pay less than that,â said one music source.
Top-level music sources say the remaining 15 percent of YouTube users are hugely valuable because there are so many of them. Even that small slice of YouTube users headed to paid service would be three times more beneficial to music industry coffers than the current percentage of ad revenue and per-stream rate of 3 cents, according to one source.
âItâs an incredibly flawed report,â said the source. âThey destabilize the marketplace, itâs a free on-demand music service, and there is no ability to license it.â
According to the RBB report, paid streaming music services have continued to grow alongside YouTube. The report says that YouTube is aiding the music industry by helping promote sales rather than hindering them. The report also states that YouTube has generated $1 billion in revenue for the music labels.
YouTube. which is led by CEO Susan Wojcicki, is projected to reach $7.05 billion in ad revenue in 2017, a 26 percent jump, according to eMarketer data. YouTube has 185.9 million monthly users in the US, the company said.
Universal Music and Sony Music want YouTube to pay higher rates that are more akin to what paid streaming services such as Spotify and Apple cough up.
International music organization IFPI says paid streamers paid up $3.9 billion to the music labels in 2016 on just 212 million users.
âIn other words, the very premise of the analysis is all wrong,â said a spokesman for the Recording Industry Association of America. âThe issue is about fair compensation, not about whether YouTube should exist or no longer offer music.â
Meanwhile, earlier this month Warner Music signed a deal to license content to YouTube, infuriating other labels.
âWe secured the best possible deals under very difficult circumstances,â Warner Music CEO Stephen Cooper said. âOur new deals are also shorter than usual, giving us more options in the future.â
A YouTube spokeswoman said labels âcan easily decide whether to have fan-uploaded content taken down, or profit from it on YouTubeâ through a copyright claims system that has paid out $2 billion to rights holders thus far.