[Ecommerce] YouTube, Google and the Majors - a classic example of how not to do it

[Michelle Childs]

Last week there were a number of posts on YouTube and copyright
infringement.  They were cross posted so this is too.

Below is an article from the Record containing a different view from Peter
Jenner (one of his day jobs is to work for the International Music
Managers forum) but  this  is written  in a personal capacity.

He raises some critical issues about payment to artists and consumer usage
 beyond  the notice and take down  discussion. For instance: What happens
if I am happy for it to be there but just think my artist should get some
reasonable remuneration. Is it all or nothing ?

I also liked the Wells Fargo analogy!
Michelle
<snip>
So the big question is how are all the creators going to get paid for
their contributions to the business, however grand or however humble? How
are we going to resolve the conflicting claims of different content
providers? I would argue that this whole episode reveals the bankruptcy
not of copyright but of copyright regimes and structures which have been
carried over from a different time and different technologies.  Is the
whole idea of exclusive monopolistic rights outmoded and dysfunctional?
Should we be thinking of remuneration rights rather than exclusive rights?
Should we be thinking of arbitration rather than litigation, or agreements
rather than legislation?

The people in the middle (the majors) seem so desperate to protect their
terra that they are willing to drag the rest of us down with them. When
the railway arrived in the Wild West only one stage coach company
survived, that was WellsFargo, and that became a bank. Which record
company is the WellsFargo?




YouTube, Google and the Majors - a classic example of how not to do it

Before I start my rant let me say I would probably have made a bigger mess
of this whole deal than they have, but hey, I am one little bloke, without
an army of executives, advisors and lawyers and I=92ve got a big mouth.

Rumours have been flying around like mad even since three of the Big Four
=91licensed=92 their material to YouTube. The rumour mill really kicked int=
o
high gear after the YouTube deal went down for a cool $1.65 Billion. The
heart of these rumours is that the majors didn=92t do a license deal at all
and instead got a piece of YouTube and thus Google shares in return for
agreeing not to sue a la Napster the newly wed YouTube/Google.

All this, of course, has been shrouded in secrecy leaving us with no
indication of either what the deal going forward will be or, indeed what
the business model for YouTube will be. All we can do is assume that with
Google as the purchaser YouTube will develop into an advertising-driven
business.

However in all the excitement no one has mentioned payment to the artists
or the writers or the publishers, either for past usage of their material
or for future use. There is also no mention of how the public will be
allowed to use content on YouTube. These two key points are important to
keep in mind given that there also seems to be no question that YouTube
can filter out =91inappropriate=92 and =91non-cleared=92 material, and woul=
d have
difficulty hiding behind the =91safe harbour=92 excuse.

But the real problem is that there has been no attempt to get all parties
(writers, publishers, performers, performance and neighbouring rights
societies, major and indie record companies, session men, producers etc)
together to work out how the service could develop to the advantage of
all. The public - those that have defined what they want from YouTube, the
right to be silly, the right to do mash ups, and the right to show their
favourite clips from film and TV must be involved in this equation as
well.

The way that the whole deal has been shrouded in secrecy and =91commercial
confidentiality=92 just encourages people, like me, to assume the worst.
With there being no indication of the basic terms of the deal (such things
as length of term, usages, rates, exceptions, etc=85) it looks as though th=
e
whole of the majors=92 catalogues have been sold to YouTube for $50M for th=
e
majors, but for what we do not know, and I wonder if anyone knows.

So where is YouTube going? Is it just going to be an on-demand MTV. That=92=
s
not very interesting and what is the revenue model for YouTube and hence
the record companies, and how is that covered within artists=92 contracts?
Will the usage information be broken down by track, or will it be
aggregated by label and therefore any monies would become non-attributable
income? Who is taking care of the writers and publishers?

Is music used on YouTube a performance or a purchase, oh and what is the
royalty rate for the publishers, and are the rates broken down by the
territory of upload or download? What are we going to do about mash-ups,
and Karaoke versions, and unauthorized live video, and who owns those live
recordings, and the artists=92 pictures, and their blogs and video blogs,
and who owns the links to all those friends and fans in the network? Are
there going to be links to artists=92 sites which can permit sales? Or will
all commercial traffic have to go through YouTube and preferred suppliers?

How will unsigned talent get paid, or are they just going to be expected
to settle for their fifteen minutes of fame and assign all their rights?
What about the little labels from Bulgaria, and Mozambique, who is going
to pay them? Is all the spare cash going to be given to the big Western
stars, or rather their labels, or just pocketed by Google?

The Pandora=92s box has now been opened and we all have visions of $1.65
BILLION  and  everyone wants their share, and the lawyers can smell our
hunger and our greed, and the public, in turn, will smell that greed and
cynicism.

In short YouTube is likely to become very un-hip very quickly if it
becomes run by the rights clearing lawyers, and major label and studio
gate keepers.  The public, the citizens can smell a racket. If everyone
does not get paid equitably the site will be seen as another corporate
rip-off, which will taint Google as much as YouTube. The music industry
will lose a great way of connecting with the public and YouTube will be
exposed to ruinous and unending litigation =96 (remember the Napster case i=
s
still rumbling away somewhere in some Dickensian hell)- as a queue of
lawyers from London to Google HQ will be lining up with their hands
outstretched.  But if the industry just ignores all the normal rules,
which the industry has been insisting on so rigorously enforcing up to
date, how can they enforce them anywhere else? By not facing up to the
challenge of the internet, and wishing it would behave like the analogue
world, they have failed to address the intellectual challenge of how to
deal with rights in a totally new environment, except by trying to put
straitjackets on the technology and defying the public=92s clear desire to
explore the potential of the new media.

What has happened with YouTube is that rampant copyright infringement has
been allowed to flourish, then the community of users, creators and
editors and all their infringement has been sold to the highest bidder,
and the majors have put their noses eagerly into the trough, and turned
themselves into manifest hypocrites. How can IFPI announce the start of
suing file-sharers in Brazil and in 16 other countries in the same week
they line up to take Google=92s cheque?

The point is that the new generation relates to music and images in a
radically different way from previous generations. It is an audio-visual
cut and paste collage world (of Read and Write, not Read only) and if we
try to insist on chasing down every particular use and every play and
every file shared we will neither get great art nor good money nor the
love of the public. We will all become as loved and respected as used car
salesmen or politicians.



The recorded music industry has been given this incredible gift of a new
technology which permits the liberating freedom of self-expression in ways
which permit communicating with the public and by the public in totally
new ways, and permits new forms of communication, creation, distribution
and manufacture of recorded music, at a fraction of historical prices. As
an industry though, we seem be trying to shackle it with the chains of
nineteenth century concepts of copyright that aim to control copying in an
era where a whole new world economy is being built on the ability to copy
and reproduce, deliver and exchange with extraordinary ease and minimal
cost.

This isn=92t the same as Napster, but there is no indication that the major=
s
have really learnt from that experience/disaster and thought through what
is going on, and how they might re-build their business model in the
context of the reality of fundamental economic change. The majors appear
to be intent in lining their own pockets and protecting their dominance
without any regard to the only two parties who really matter and need to
be kept on side - the creators and the consumers/user.

So the big question is how are all the creators going to get paid for
their contributions to the business, however grand or however humble? How
are we going to resolve the conflicting claims of different content
providers? I would argue that this whole episode reveals the bankruptcy
not of copyright but of copyright regimes and structures which have been
carried over from a different time and different technologies.  Is the
whole idea of exclusive monopolistic rights outmoded and dysfunctional?
Should we be thinking of remuneration rights rather than exclusive rights?
Should we be thinking of arbitration rather than litigation, or agreements
rather than legislation?

The people in the middle (the majors) seem so desperate to protect their
terra that they are willing to drag the rest of us down with them. When
the railway arrived in the Wild West only one stage coach company
survived, that was WellsFargo, and that became a bank. Which record
company is the WellsFargo?



=A9 Peter Jenner 2006







Michelle Childs -Head of European Affairs
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