UK music industry announces landmark deal with YouTube

There is a serious crisis facing the music industry. The problem is simple -- it costs too much to put music online legally.

The crisis facing online music reached a crescendo earlier this year, when Google took drastic unilateral action to highlight the problem by deleting all UK music videos from YouTube. The warning signs were there for all to see, for example when Pandora permanently blocked access to all UK users. YouTube issued a statement explaining the problem in very clear terms:

"PRS is now asking us to pay many, many times more for our licence than before. The costs are simply prohibitive for us - under PRS's proposed terms we would lose significant amounts of money with every playback."

At the Performing Rights Society, the organisation set up to represent the rights of artists in the UK, it was business as usual before the YouTube boycott. PRS was enforcing the rules and demanding that royalties be paid, just as it always has done ever since the early days of the music industry. But when tens of thousands of videos by artists in the UK disappeared from the world's most famous video sharing web site, PRS was forced into the realisation that it had to change in order to serve the interests of its stakeholders. PRS openly acknowledged that the outcome was against the interests of the industry. PRS declared, through Steve Porter, chief executive of PRS, that it was:

"outraged on behalf of consumers and songwriters that Google has chosen to close down access to music videos on YouTube in the UK"

PRS is "outraged"? Well, so is everybody else, and I do mean everybody. Customers are unhappy. Musicians are unhappy. Websites like YouTube are unhappy. Everybody loses. But didn't PRS cause this in the first place? That seems to be what Google said.

Of course artists should be paid for their work; but not at a price that strangles the very companies involved in distributing the music. If Google can't afford it, who can? Online music providers are providing valuable services to the music industry, and their royalty payments should be offset by the value of these services. In fact, it would be better for artists to make their content available for free, or even to pay to put it online, rather than hide it away. For example, the web creates routes for music discovery that can benefit all artists -- especially genuine new and undiscovered artists emerging from the grass-roots of the music scene. Perhaps this is part of the problem, if the music industry is trying to protect a business dominated by highly commercialised manufactured bands and artists.

Today, thankfully, came the announcement that a landmark deal has been agreed between PRS and YouTube, solving the problem for this one web site at least. It's a start, but what we need now is a solution for the whole industry. A secret deal exclusively for companies which are too big to be bullied by PRS is not a sustainable model. We can only hope that this new deal means the music industry has finally recognised that a completely new model is needed ASAP to manage rights and royalties for digital content in the age of the Internet.

04 September 2009

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Tim Acheson (08 Sep 09, 14:40)

Time for a new deal for everyone?

The current licensing models for music and video are out-dated relics from a bygone era before the web evolved. The organisations responsible for managing the rights over digital content are like ancient dinosours, destined for extinction unless they can adapt to keep-up with a changing environment.

This is the complaint voiced by many consumers who download and share media content online. They cite, as justification for illegal file sharing, the archaic and inflexible nature of the systems currently in place. The way in which content is consumed is changing rapidly, changing substantially, and changing forever. Unfortunately, instead of embracing technological developments and recognising the benefits, the music industry is trying -- and of course failing -- to fight against the tide of change.

Tim Acheson (20 Oct 09, 14:06)

Update: What is the future of music online?
"Virgin spent millions of pounds and it would have been the world's first legal P2P service, with no DRM restrictions. Virgin hasn't cancelled it but they've stood the teams down because the music business is so hard to deal with."


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