Entertainment & Arts

YouTube's $1bn royalties are not enough, says music industry

Lady Gaga Image copyright Getty Images
Image caption Lady Gaga, whose videos have been streamed two billion times, has criticised YouTube

YouTube has said it has paid the music industry $1bn (£794m) in royalties this year - but record companies have responded by claiming it is not enough.

The spat began on Tuesday, when YouTube's chief business officer Robert Kyncl posted a blog highlighting the site's contribution to the industry.

He said YouTube had distributed $1bn in advertising royalties alone, arguing that "free" streaming was as important as subscription sites like Spotify.

But record labels were not impressed.

"Google has issued more unexplained numbers on what it claims YouTube pays the music industry," said a spokesperson for the global music body, the IFPI.

"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 revenue generated by other services, ranging from Apple to Deezer to Spotify. For example, in 2015 Spotify alone paid record labels some $2bn, equivalent to an estimated $18 per user."

In his blog post, Mr Kyncl conceded that the current model was not perfect, arguing: "There is a lot of work that must be done by YouTube and the industry as a whole.

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

Image copyright YouTube
Image caption Nine of the 10 most-watched clips on YouTube are music videos, topped by Psy's Gangnam Style

The music industry has targeted YouTube - and other free streaming sites - as their villains du jour.

They say YouTube does not pay a fair rate to musicians and record labels, and is slow to police illegal and pirated material uploaded by its users - a claim which YouTube disputes.

The rhetoric intensified this year as YouTube's licensing agreements with the three major record labels - Sony, Warner and Universal - came up for renewal.

The industry has also pushed for reforms to the "safe harbour" laws, which mean YouTube and other similar sites cannot be penalised when users upload copyrighted material - including full albums - provided they remove it on request.

Artists like Lady Gaga, Sir Paul McCartney, Ed Sheeran, Coldplay and Abba have all written to the US Congress asking for the law to be changed.

YouTube recently hired former Warner Music executive Lyor Cohen as its head of music, a move which was widely interpreted as an attempt to smooth relations with the music industry.

He took up his post on Monday, 24 hours before Kyncl's blog post was published.

However, the IFPI has maintained its position, saying in a statement that YouTube is still "not paying artists and producers anything like a fair rate for music".

It continued: "This highlights more than ever the need for legislative action to address the 'value gap' that is denying music rights holders a fair return for their work."

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