Thousands of music videos from Independent Artists like Adele, Radiohead, Arctic Monkeys, among many others are expected to go off the YouTube’s shelf.
As YouTube gears-up to launch its new subscription based service, some independent record labels including XL, Domino, and 4AD, are refusing to sign new licensing terms. In an attempt to force the new licensing agreements, YouTube is now threatening to remove all the videos affiliated with these labels.
According to these Independent labels, the royalty rate that they have been offered are far less than the Royalty rates offered to giant record labels like Sony, Warner and Universal, who have all reportedly accepted the terms. As a result, the “American Association of Independent Music” (which represents US indie labels) has petitioned the US Federal Trade Commission to intervene.
The new Monthly subscription based service aims to provide users with convenience to download their streams to enable offline listening and also eliminate advertisements that are necessary to the revenue stream of the Music owner. The same kind of service is already being provided by Rhapsody and Spotify for years.
YouTube is quickly becoming a major source of income for all the record labels. It is effectively the largest on-demand music service, with tens of millions of Music Videos. However, users must sit through ads before they begin to listen the Music.
The revenue from these streaming and the ads shown with it is greater than the sales of the music. It’s no longer an advertisement, it is the product. The Independent labels fear that they would generate less revenue if they agree with the less royalty rate which they have been offered.
According to YouTube, three major record labels – Universal Music Group, Sony Music Entertainment and Warner Music Group that make up for 90% of the commercial music production in the world, have all signed the agreement. With just 10% remaining labels who have refused to comply with the terms, YouTube is pretty much destined to launch its streaming service with or without the 10% remaining labels.