The YouTube War Is Over
Tuesday, September 8th, 2009
YouTube/Google have finally come to an agreement with PRS, but don’t expect to find out the details any time soon.
Access all areas … the big names are back on YouTube. Photograph: David J. Green/Alamy
After long, drawn-out negotiations, PRS for Music and YouTube have finally come to an agreement over rates. It’s good news for British music fans, since YouTube’s blocking of premium music videos on their site will now be lifted. What it means for songwriters financially is still a mystery however, since the agreement is covered by a Non-Disclosure Agreement.
According to sources close to the negotiations, Google/YouTube took the NDA to another level by insisting that the people at the negotiating table would not even be allowed to tell the PRS board what the agreement is (although the PRS say they would never pass anything without it being seen and signed off by their board). It’s rumoured that YouTube only wanted two people to know – one YouTube rep and one PRS rep. It makes you wonder what information can be so sensitive as to push requests for secrecy that far. For a company that is all about sharing information, it’s somewhat ironic that Google are so unwilling to share any of their own.
Of course, insisting on NDAs is common practice in business, mainly because of competition laws. We can only speculate why the parties involved in the YouTube/PRS negotiations use them. YouTube may not want anyone to know what they’re paying for the premium music video streams (they don’t pay for user generated content), as it would set precedent for future negotiations with other companies. All the PRS can tell me is that “it was a lump sum deal and both sides feel they’ve got the best they can”. I said in a blogpost back in May that YouTube wanted to pay a flat fee – and not the lowered rate of 0.085p per stream the PRS came up with. From what I can gather from the PRS, it looks like YouTube got their way. In other words, the more successful YouTube is, the less the songwriters are going to get paid per stream (ie they get the same amount of money regardless). I suspect the PRS’s reason for signing an NDA maybe to spare them the wrath of their members and to not set a dangerously low precedent for future negotiations with other companies.
The increased use of NDAs in pretty much every deal that is struck between music services and record labels (and the PRS) has become a huge thorn in the side of artists and songwriters – and their managers. They argue that these deals are being done on their behalf, since it’s their product that is on offer, and so they have a right to know the details of any agreement. Many believe record labels are hiding behind NDAs, so as to not pay the artists the correct royalties. It’s no surprise that artists and managers have a lack of trust towards labels, as the history of the record industry is littered with examples of artists getting shafted.
Patrick Rackow, chief executive of Basca (the British Academy of Composers and Songwriters) says: “Basca is not in favour of deals being done the terms of which cannot even be disclosed to the PRS board, because of conflicts or potential conflicts of interest. PRS for Music publishes its rates for online use and that should be that. The same applies to deals which are being done directly by the major publishers and record companies. How can royalties due to composers and artists be properly audited if the terms of the deals upon which they are based are not disclosed?”
A major music attorney I spoke to says: “Basca are free to say what they want, as they hold no power and have nothing to lose. They’re like the Green Party opposing big bank bonuses. They don’t have to deal with the reality of how business is done.”
But it’s not just Basca who have concerns. Brian Message, the head of the Music Managers Forum and manager of Radiohead, says: “As our industry continues to evolve and grapple with the jaw-dropping pace of technological change, it is imperative that those that profit from the artist/fan relationship do so with full disclosure to both the creators of the art we work with and the consumers without whom there would be no industry.
“Whether selling concert tickets, or striking new, innovative deals for the sale of recorded music with mobile phone partners,” he continues, “we all need to move on from the culture of Non-Disclosure Agreements, unclear pricing structures and the like. The adoption of a transparent approach has to be good for the industry as a whole and good for culture.”
So what happens if information is leaked, despite an NDA being signed? Music attorney Tom Frederikse, who has been (and still is) involved in many digital music service negotiations, says that NDAs are known to have “great bluff value”, for the companies insisting on them. They’re used to scare people into keeping schtum. He says that, in reality, they’re very difficult to enforce. “You can’t take a company to court for leaking information, only the person doing the leaking, which limits the possible pay-outs considerably. And how do you quantify the damage being done by a leak?”
The manager of a major UK act, who wants to remain anonymous, tells me that he predicts there’ll be a big lawsuit in the pipeline. “We wouldn’t take on Google. No one can fight them and win. They’re too powerful. But there will be an artist suing one of the majors,” he says.
Another manager says: “We need an artist to take an audit all the way, so as to set a precedent. But who’s going to do it? It’s going to cost a fortune, and most artists are afraid of alienating the label they’re signed to – that’s why they tend to settle.” (This is what happened in the case of 30 Seconds to Mars, for example) “It’ll most likely be a very successful artist who is out of their record deal and doesn’t care.”
Any volunteers?
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