Music videos from major artists have now finally been made available on YouTube in the UK, signalling the end of a 6-month dispute between the video sharing site and PRS for Music, the organisation responsible for collecting royalties for songwriters when their music is played in public, recorded, broadcast or made available to the public online.
In March, YouTube blocked UK access to premium music clips posted by major record companies after failing to reach a new deal with the PRS on how much songwriters and artists should be paid each time their videos are viewed. YouTube, owned by internet giant Google, claimed that the PRS wanted a much higher sum than had been in place under the previous arrangement and removed the videos in a move which UK music called “blatant, cynical and manipulative”, claiming that Google intended to “bully around a little society that represents 60,000 songwriters” and wanted to agree a sum that was “significantly less than at present”.
Under the new deal, YouTube will pay an undisclosed lump sum to PRS which will cover the period from January this year until 2012.
This is a great result for all concerned. YouTube depends upon content to make its money, and the PRS depends upon the broadcast of content to pay royalties to its members. This just goes to show how the music industry has changed over the past 15 or so years and emphasises the importance of online outlets to develop new and enhance the profile of existing artists.
YouTube started out in 2005 as a website based primarily on user-generated content or “UGC”, inviting users to post up footage of pretty much anything, subject to certain guidelines. It became phenomenally popular over a very short period of time (according to some statistics, in the top 5 most-visited sites on the web) and quickly saw its users posting all kinds of video and audio material, as video sharing became a hugely important part of video culture. Google purchased the site in 2006. Posting a video of yourself is one thing, but YouTube ran into trouble when users began to post content which belonged to Movie and TV Studios and record companies.
The Entertainment Industry has been fighting a long-running battle with YouTube since its launch to ensure that videos and audio which belongs to them isn’t posted without their permission and without receiving a royalty. Users have taken to posting entire movies, every episode of TV series and whole albums by a wide range of major label artists to share with their friends and/or comment on what they post. Doing so without consent from the record company, TV or movie studio is an infringement of copyright by copying the original material. YouTube then becomes part of that problem by copying the material onto its server and making it available to the public. The damages which a Court will normally award for this kind of infringement would be the royalty which you’d normally charge for licensing the content in question or an account of the profits generated via the infringement. In YouTube’s case, such a figure could be very significant.
The issue led to the Entertainment Industry lining up to take on YouTube, with Paramount at the front of the queue. The US TV and Movie studio sued Google for $1 Billion after entire series of their most popular TV shows showed up on the site and 150,000 unauthorised clips were allegedly downloaded over 1.5 billion times. A claim from the FA Premier League followed soon after. YouTube does carry a disclaimer advising not to post TV shows, music videos, concert footage or commercials unless they were created entirely by the user. Despite this, however, a huge amount of unathorised video still remains on the site and this has led to agreements being put in place with many record companies, movie and TV studios which will see their content being posted on the site along with advertisements.
This is what led to many of the major record companies embracing the website to allow the public to view videos of their artists and hopefully boost sales in a major downturn for the music industry. However, permission to do so comes with a price, which is where the PRS comes in. The PRS collects royalties for music publishers and ultimately their songwriters to collect royalties when their material is used. Music contains two different kinds of copyright – in the sound recording and in the actual music and lyrics. Record companies can make whatever deal they want to with Google over the video and/or song as they are usually the owners of the copyright in sound recording, but the copyright in the actual composition and lyrics of the song is often separate, and it’s these royalties that the PRS collect for songwriters. The idea is that a songwriter or composer still gets something for their work even if the actual recording of their song is owned by the record label, with royalties paid by the PRS via licences for any music which is played in public over a sound system, via radio, TV or online.
The big issue here is that more and more people are getting their music over the web, which will become a huge source of income for Songwriters over the next few years as it allows their work to reach a much wider audience than via CD sales or legal downloads alone. If a user downloads a song, they pay for it once but if they watch a video or listen to a track on YouTube, it can’t be saved to a PC and needs to be viewed over and over again, with a small royalty being due via the PRS each time. It’s in their interest to do some kind of deal with YouTube and earn royalties now rather than get into a long-running dispute and end up losing out on a massive amount of potential income.
YouTube, however, also need the Songwriters to play ball. The site has come under increasing pressure from Google to generate more profits since its purchase, and given that it’s free for the public to post videos on the site, the natural way of increasing revenue will be to cut deals with the Entertainment Industry to licence their material so that they can reach their goal of becoming the Internet’s premier site for video and audio content. Not only that, but entering into deals will mean that YouTube will face fewer disputes with rights owners as it continues to grow and more third party material finds its way onto the site. The only other way of dealing with the problem would be to vet users accounts for any unauthorised material, which would add in huge expense to their operating costs. Not only that, but record companies and TV studios would have to approach YouTube and demand that the content be taken down on the grounds that it infringes copyright. This again costs money, mainly for the rights owner, but if the case does end up in Court after YouTube refused to comply, the site could end up liable for their and the rights owner’s legal costs.
This is a sign that the Entertainment Industry is starting to move with the times and embrace the cultural shift that YouTube represents, and also that YouTube realise that they can’t get away with Copyright Infringement forever. It is, perhaps, Entertainment Industry’s the most important asset. If you are a rights owner and have spotted your content on YouTube, either approach them to cut a deal to licence it or demand that it is taken down. If YouTube don’t comply, then you can sue them just as much as the person who copied your content. The chances are that YouTube will be the Defendant who can afford to pay your costs and damages.