YouTube’s New Streaming Service Leaves Indie Labels At A Crossroads

06.18.14 4 years ago 9 Comments

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Recent news confirms Google is not-so-secretly setting up some sort of a premium music streaming platform of their own to rival the likes of Spotify and Beats Music*. Up until very recently, the existence of said platform was never confirmed, but with their shrewd tactics to coerce indie labels to hop on board it’s all but official now.

There’s two conflicting rumors spreading around about how Google’s playing a massive game of chicken with labels. One says that they’re threatening to remove any and all videos uploaded by the labels who do not sign up with their streaming service. The Guardian went as far as stating, “Independent artists could disappear from YouTube ‘in a matter of days.'”

But the other, more rational school of thought is that Google will simply remove monetization options from labels that don’t play nice, a tactic that definitely makes more sense than removing videos altogether. According to a source at Digital Music News:

“With the surrounding text (and other things I’ve read including the partner agreement) I take it to say “We’re blocking videos [from monetization].” When they say “platform” they mean content ID. Saying they’re blocking videos from YouTube doesn’t make any logical sense to YouTube as a platform. One thing I’ve noticed from working with them is they tend to use a lot of insider language when trying to communicate with the masses. It’s very confusing.”

After the initial backlash occurred, Google released their own statement.

“Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry. We’re adding subscription-based features for music on YouTube with this in mind — to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year. We are excited that hundreds of major and independent labels are already partnering with us.”

Seeing that hosting content is what YouTube does as a business, removing videos is counterintuitive and would simply drive away millions of potential visitors to other, competing websites (*hint, hint* Vimeo, now’s your chance to take advantage). But, removing ads and royalty distribution to those videos would effectively punish their clients without hurting the consumer arm of the company.

It’s a slick move that’s sure to have publishers up in arms for a while, until they see the amount of money left on the table by not conforming. It will only be a matter of time before bruised egos get brushed aside in favor of improving the bottom line. To put things into perspective, according to Forbes, PSY made $2 Million off ads, thanks to the resounding success of “Gangam Style.”

Obviously that’s an outlier, but it’s way too much dough that can potentially be lost to cause any earth-shattering changes to the status quo.

* — Technically, Google already has a streaming music service, Google All Access.

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