Music Industry: YouTube’s $1Bn Royalty Is Too Small

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YouTube said it has paid the music industry £794 million ($1 billion) in royalties in 2016, but according to the record companies, that royalty is not enough. The spat started when Robert Kyncl, YouTube’s chief business officer, posted a blog on Tuesday underling the site’s contribution to the music industry, according to the BBC.

YouTube slow in policing illegal material and pays too little

Kyncl said the video streaming giant had distributed $1 billion just in advertising royalties. He argued that free streaming is as essential as subscription sites like Spotify. The record labels, however, were not impressed.

The music industry sees free streaming sites like YouTube as villains. According to them, Google’s service does not pay a fair rate to record labels and singers and is slow to police pirated and illegal material uploaded by its users, notes the BBC. YouTube, however, disputes all these claims.

The tussle between the music industry and free streaming sites intensified this year when YouTube’s licensing agreements with the three major record labels – Universal, Sony and Warner — came up for renewal.

Recently, the video streaming company hired Lyor Cohen, a former Warner Music executive, as its head of music. The move was seen as an attempt by the company to improve its relationship with the music industry. Cohen started working there on Monday, or a day before this post from Kyncl, notes the BBC.

Music industry slams YouTube for low royalties

Referring to Kyncl’s post, a spokesperson for the global music body IFPI said, “Google has issued more unexplained numbers on what it claims YouTube pays the music industry. The announcement gives little reason to celebrate, however. With 800 million music users worldwide, YouTube is generating revenues of just over $1 per user for the entire year.”

This “pales” in comparison to the revenues generated by other services, ranging from Spotify to Deezer to Apple, said the IFPI. Giving an example, the spokesperson said Spotify alone paid record labels around $2 billion in 2015, which is equivalent to an estimated $18 per user.

In his blog post, Kyncl did admit that the current model was not perfect. He said a lot of work needs to be done by YouTube and the music industry as a whole.

“But we are excited to see the momentum,” he added.

Nevertheless, the IFBI maintains its position, saying that YouTube is still “not paying artists and producers anything like a fair rate for music.”

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