The Deal With Independent Music Getting Pulled from YouTube

youtubeWell now, it looks like the massive, unfettered expansion by pretty music every information provider into the realm of digital music streaming has finally hit a snag. It’s hard to say this couldn’t be expected. With all this cheap or free music being provided to everyone’s fingertips through their phones and mobile devices, at some point it was feasible to think that someone was going to have to pay for it. The last few years in digital music have been like the industrialization in the 80’s: unregulated and unnatural aggrandizement that eventually the future will have to pay for in the form of ponying up for unpaid bills and cleaning up polluted resources.

Here’s there long and short of the current problem: Just like iTunes, Beats, Amazon, your local school district, and your refrigerator repair company, YouTube has decided it’s getting into the digital streaming music service too. Ironically, YouTube is one of the companies that already has a significant chunk of the digital streaming market, and one of the most significant footprints in the business. It’s just not in a convenient delivery form like its competitors. Look at the chart below, graciously provided to us by the industrious folks at Edison Research. Yes that’s right, not radio, not Spotify, not iTunes or their friends at school, but YouTube is the place that music’s coveted 12-24 year-old demographic goes most to discover new music.

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However the problem is YouTube is not really set up like its burgeoning rivals to make the best of the current music streaming paradigm. One of the reasons so many people crash YouTube to discover music is because it is free, gratis, no dough to go there and listen/watch your favorite music, or oogle at all the greatest atrocities modern music has to offer (i.e. Rebecca Black or Billy Ray Cyrus’s “Achy Breaky 2″). So YouTube, or more importantly its parent company Google, wants a piece of the digital streaming subscription pie. Sure, that’s fine, can’t be that hard to do, especially since every else is, right? Wrong. YouTube and Google have hit the mother of all snags, and since Spotify, iTunes, Beats, iHeartRadio, and a litany of other companies continue to gobble up market share, YouTube wants to get into the game sooner than later, and are unwilling to let tired negotiations with independent labels on long-standing licensing issues get in their way.

What does this mean? This means your favorite independent bands could be going away from YouTube. That’s right, that dreaded sign of the little digitized frowny face you see when you roll up on a video that has been yanked? That could replace that perfect song that gets you pumped for your morning workout, or that lulls your little tike to sleep every night.  Yeah, totally uncool for you, but think about the artists and labels that rely on the revenue and promotion from YouTube that will be left in a lurch if this seemingly unconscionable decision was allowed to occur.

And occur it might, at least if you listen to the rhetoric from Google. They’re saying the launching of their paid streaming service is “imminent”, and if they can’t reach an agreement with indie labels on licensing, they will have to pull all of the unlicensed music entirely, even from their current free service as not to be unfair to their paying customers.

But let’s not get ready to grab our pitchforks and storm Google’s corporate headquarters just yet. Besides the fact that Google’s headquarters is pretty damn far away from most of us, this could all just be rhetoric to twist the arm of America’s indie labels to agree to Google’s terms. Or even if it is true brinksmanship, like we have seen numerous times with cable providers and content companies, many times even when the content is pulled, it is eventually replaced when cooler heads prevail. It would seem scandalous, and potentially murderous of Google’s YouTube business plan to cheese off all those fans of independent music, right?

Well, maybe. According to Google, their rights beef only pertains to about 10% of the music represented on the site, despite independent music making up a much greater piece of the actual music pie, 32% in fact according to Phonofile. For goodness sake, Adele is officially and independent artist. So is Jack White. We’re not just talking about our favorite local bands anymore who we still pretend to like because we can’t get their damn bumper sticker off our back car window no matter what solvents we try, we’re talking some big, international bands and artists here people.

And let’s not forget that YouTube plays are also pegged to Billboard’s charts now, and so if YouTube’s negotiations with independent labels go asunder and indie media gets yanked, that means less metadata coming into Billboard, and worse chart performances for independent artists.

But there’s hope on the independent music side, because despite the collective of independent music owners representing a pretty motley crue of music miscreants, they have banded together in an organizations called (Don Don Don!!) …. Merlin and A2IM Merlin Network and other such organizations represent the “world’s leading independents” by globally negotiating rights with entities like YouTube to make sure that independent artists get access to formats, and get paid for royalties, which independents have been complaining about for years since they don’t have the same negotiating leverage as the major labels do.

But trust me, this problem goes much, much deeper, and was first signaled when Amazon launched its streaming service last week, but was only able to include 1 million songs compared to the 20 million or so songs of some of its competitors because of similar rights negotiating issues. Long story short, labels of all sizes figured out through the Spotify and Pandora experiments that they were getting screwed, and they are now demanding more compensation. But despite all these companies feeling like it is a must that they get into this crazy digital music streaming business, the financial numbers in many cases simply just don’t add up to profitability unless someone is getting squeezed. And you can’t squeeze the consumer because with so many cheap or free options, they’ll just go somewhere else.

As much as we want to blame companies like Spotify and YouTube for screwing our favorite artists, not all the blame is upon them. Many of these new digital music companies aren’t even pulling a profit themselves. That’s why they’re trying to pay out as little as possible to labels and artists. Why is the money so tight in streaming? Because consumers are demanding these services for cheap or free. You can’t charge more than $9.99 to get unlimited access to every single damn song that was ever recorded in the history of planet Earth when many consumers already feel it is their right to listen to music for free, and there’s services that already offer that. Where does music come from? Do the people who make it have to eat? How about the engineers and producers of it, or the distributors and sellers? Consumers will put hours of time into the endeavor of procuring free music, even if it would be more efficient for them to purchase it in the first place. They will hop fences and commit felonies to obtain free music. In the last few years, for some reason, music consumers have decided that free music is an inalienable right.

Price points killed music. When iTunes pegged the value of someone’s deep artistic expression at .99 cents, we were doomed.

We devalued music with price points. No wonder it sounds like crap. Why do all songs sounds the same? Why are songs written by committee? Why do you only hear the same dozen artists on the radio? Because the music-making process has been automated and streamlined to meet the efficiencies necessitated by consumer’s price point demands. Meanwhile many of the same people complaining about what major corporations are doing to our country are also vested heavily in these same corporations through retirement accounts, 401K’s, or other investments, and by proxy, demand these companies show increasing profits each quarter, putting pressure on executive heads to be bean counters first, and conscious leaders of their respective industries second.

Of course, most of the big music companies deal in outmoded practices as their executives yank the ripcords on luxurious golden parachutes while the company goes down the tubes or succumbs to the massive consolidation we’re seeing to stay afloat. Meanwhile who needs the money more being fought for between Google and independent labels? Last time I looked Google was doing just fine. In many ways independent music is on the brink of extinction as a viable business model. Is Google and YouTube the big bad wolf here? Of course they are. But don’t be afraid to look in the mirror too, Mr. Modern Day Music Consumer, when laying blame for the ills of today’s music.

One way or another, this YouTube / independent label issue will be resolved. And if it isn’t, another video solution will pop up in its stead to serve indies, or is probably already out there in the form of Vimeo and other established video forms, because that’s the way these things work. Will it be inconvenient? Will it be costly? Sure. But wanting everything free and easy is one of the problems that got us here.