YOUTUBE WEIGHS IN ON STREAMING DEBATE

YouTube has warned the U.K. Government that new legislation could result in “lowering the revenue” it pays to media and music companies as a result of online services “needing to over-block content to mitigate potentially significant legal risk.”

In a written submission to the U.K.’s ongoing inquiry into the economics of streaming, YouTube’s comments follow the third evidence session on 1/19, where issues were raised around the service’s Content ID system, its ability to “hide behind” safe harbor laws, and the amount it pays to artists vs. the amount of music consumption that happens on the service.

YouTube said record labels agree that it could become “the music industry’s #1 source of revenue by 2025” in its submission. It warns, however, that “any overbroad” implementation of legislation like Article 17—which calls for stricter copyright-infringement controls that the U.K. is no longer legally required to implement following Brexit—“may lead to vague, untested requirements” that could result in online services having a stricter approach to blocking content. This, YouTube wrote, “will potentially devastate the many creators, artists and songwriters who have built their businesses on our platform.”

A lack of data regarding ownership of rights—which historically has been very difficult for platforms like YouTube to obtain, they say—“could lead to over-blocking in an Article 17-like regime and ironically could favor incumbents vs. new insurgents within the industry.”

“After all, if you multiply these risks with the scale of YouTube, where over 500 hours of video are uploaded every minute, the potential liabilities could be so large that no company, especially startups, could take on such a financial risk.”

YouTube is asking that any copyright changes should not be introduced in the U.K. until a “full economic impact assessment can be made of the impact of Article 17 in the EU.” The platform is also calling for the committee to explore the development of a comprehensive musical works and sound recording ownership database that would have “beneficial applications across all areas of music licensing” and transparency around how music creators’ royalties are calculated and distributed “throughout the entire ecosystem.”

In January’s evidence session, Universal Music U.K. CEO David Joseph pointed out that YouTube hosts 70% of music consumption for his label, while returning “only 5% of our revenues.” PPL CEO Peter Leathem also raised the ‘value-gap’ and said: “We have support from Government to say that there clearly is an issue still and there does need to be more liability at the ISP level to make sure that better deals can be done to support the overall industry.”

PRS for Music CEO Andrea C. Martin said safe harbor rules need to be updated for content recognition tools to be effective for all works, while Warner Music U.K. CEO Tony Harlow said the industry would be “healthier” if YouTube were not able to hide behind safe harbor provisions. “If the [streaming revenue] pool grew on the basis of less ability to hide behind safe harbor, that is probably the most effective thing we could ask for to improve the artists’ position,” Harlow said.