Saint or Sinner? YouTube's tricky relationship with music

12 August 2010

by Eamonn Forde

YouTube’s fifth anniversary this year has been marked by both controversy and innovation. Fresh from a court victory in a landmark copyright case brought against it by Viacom, it has now launched a new music discovery and recommendation channel. It might have reinvigorated online video, but is this all good news for the music business? 

In 2010, when someone wants to watch a music video, the first place they will go is online. The music industry knows this, TV broadcasters are finally realising this and Google, or rather YouTube (the website it bought in 2006 for $1.65 billion [A$1.82 billion]), is mopping up.

The rise of YouTube is a story filled with awe, but it’s also been a tale of trampling (intentionally or otherwise) on the rightsholders whose content it has helped build itself upon. The music industry has had a difficult relationship with YouTube, simultaneously seeing it as a lifeline and a noose. As it grows, the relationship can only get more complicated and, in doing so, more fraught.  

Controversy: you don’t get big without upsetting some people

YouTube had an inauspicious start back in 2005. The first video on the site was uploaded by co-founder Jawed Karim on April 23 that year and featured a 19-second clip of him at the zoo. In half a decade, YouTube has snowballed to the point where it delivers over two billion video streams a day. In its five-year history, it has gone from curio for geeks, through critical platform for web-savvy musicians, into strategic partner for copyright holders and the subject of a three-year $1 billion [A$1.1billion] copyright infringement lawsuit that it eventually emerged victorious from.

Why Viacom sued YouTube was obvious, although never explicitly spoken about in the case: it had killed MTV, Viacom’s former golden goose. Viacom cried copyright infringement, but the subtext was that YouTube had made MTV redundant within just two years.

The long-running court case got very ugly, with Viacom accusing Google of knowing how riddled YouTube was with unlicensed content before it bought it. Google countered, arguing that Viacom was upset as it failed to buy YouTube and then sent its employees on a mission to bring the site down, flooding it with their own content to strengthen their copyright claims.

YouTube eventually emerged victorious from the case, absolved of contributory copyright infringement through the ‘safe harbor’ exemption in the Digital Millennium Copyright Act. Under this law, YouTube could not be held accountable from infringements by its users (essentially people ripping and uploading videos they did not own the rights to) – so long as it complied with takedown notices from aggrieved copyright holders.

While Viacom’s lawsuit (in both its length and the amount in settlement it was seeking) dominated the headlines, a number of other disputes between copyright holders and YouTube happened in its shadow. Keen to not repeat the mistakes of the past (namely handing over the keys to MTV in the 1980s by giving their videos away for free), labels wanted greater control. Still stinging from the realisation that digital naïveté on their part turned iTunes very quickly from servant to master, YouTube became the battleground for labels and publishers keen to seize the whip hand.

In quick succession at the end of 2008 and start of 2009, both Warner Music and the PRS (on behalf of publishers and songwriters) demanded that YouTube pull their content until new deal terms could be negotiated. Both copyright owners went at it slightly differently but both had the same goal in mind – making more money from YouTube and not giving away their precious content for nickels and dimes. PRS was able to secure a payment covering retrospective use and an advance for the next three years. Warner, meanwhile, seized control of its own ad inventory on the site, selling its own ad space around its videos.

GEMA, acting on behalf of publishers in Germany, demanded the removal of 600 of its members’ videos from the site back in May this year. Known as a much tougher negotiator than other societies (and demanding much higher rates), GEMA has still to reach a resolution with YouTube.

Sacem, however, in France has resolved its long-running differences and returned its content. Sony and Universal had a slightly different tact, entering into a JV for the Vevo premium video channel that is building steadily. Part of the thinking behind this was to remove the usergenerated side that made YouTube so popular (and such a magnet for infringed content), meaning all content is controlled (and, crucially, monetised) by the copyright holders. But, in the grand scheme of things, Vevo is very much YouTube’s poor relation. And the same goes for Google Videos, Yahoo Videos, Vimeo, Hulu, Muzu and everyone else. YouTube’s market dominance is so huge as to either be laughable or terrifying.

Concessions made and innovations driven: but is that enough?

Given the fear that copyright holders have about the sheer scale of YouTube (in terms of the power it has and the depth of unlicensed content coursing around its digital veins), the company has made a number of important concessions and innovations to keep music companies on side. Last year, the site did a world first in the form of a live stream of U2’s show from the Rose Bowl in LA. A significant success for both site and band, as a concept and a marketing strategy it remains to be built on.

The biggest innovation of 2010, however, was last month’s launch of the new youtube.com/ music page, focusing heavily on discovery and recommendation. Coming after a re-launch of the site’s TV and movie pages, this new music page features the most popular music videos, special curated playlists, unsigned acts, promotions and “the ability to create on-the-fly mixes”. It is a massive leap on from the myspace.com/disco random playlist generator the service unveiled last year. Not all its innovations have been welcomed, however.

At the end of July, YouTube announced that it was extending the run time on videos so that users can upload from 10 minutes to 15 minutes. Great for the hobbyist cinematographer, but the music industry must surely be looking at this as a 50% increase in the run time for unlicensed videos and footage shot at gigs on digital cameras or video-enabled smartphones. The YouTube rights hurricane just got that little bit bigger and that little bit faster.

Size is everything: putting the scale of YouTube in context

Yes, two billion videos a day is an impressive number. But it’s only when YouTube is measured against the competition that a sense of its enormity is really arrived at. Vevo recently published figures on its uptake. It had 48m unique visitors in the US in June and over 141m unique visitors globally. Sounds good? Yes, until you realise that the 141m figure includes people watching Vevo-branded channels on YouTube as Vevo is not available outside of the US as a standalone service. Indeed, CEO Rio Caraeff recently revealed that 80% of Vevo’s traffic comes via YouTube.

According to recent comScore numbers, US internet users watched 30.3 billion videos in April. Google sites (which is basically a euphemism for YouTube) accounted for 43.2% of all views, followed by Hulu with 3.2%. YouTube’s dominance is going to sit unchallenged and unchecked for a long time to come.

In May, Lady Gaga’s video for Bad Romance passed 200m views. Hailed as a landmark, it has since been eclipsed by Justin Bieber’s Baby (269m views at the time of writing compared to 255m for Gaga). That’s how quickly things can change on YouTube. According to analytics firm TubeMogul, a video on YouTube will get 50% of its total views in the first six days. Within 20 days, it will have had 75% of its total views.

BigChampagne recently revealed that the top 10 music videos on MySpace in a week were watched 57.3m times while the top 10 tracks on MySpace Music were streamed 7.5m times. In a week, Rihanna’s Rude Boy video was streamed just over 732,000 times on MySpace Music but was watched almost 4.3m times on YouTube.