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YouTube’s War with European Collecting Societies April 6, 2009

Posted by Bill Rosenblatt in Europe, Fingerprinting, Music, Rights Licensing.
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The long-simmering dispute between Google and top European music collecting societies heated up again last week when talks broke down between the Internet company and GEMA, the German collecting society.  The dispute was over royalty rates for music videos on YouTube in that country.

Meanwhile, two musicians’ groups in the UK called for Google to “move its tanks off our lawn” and called it a “near-monopoly.”  For its own part, Google has claimed that it can’t afford to pay the collecting societies’ royalty rates because it doesn’t make enough money on advertising, yet it is insisting on paying flat rates rather than those based on the number of actual streams shown.

What a mess.  

In Google’s defense, this is just more evidence that Europe poses barriers to innovative content business models through its shunning of uniform, one-stop licensing mechanisms.   The European Commission has been angling for pan-European licensing but has met with stunning levels of resistance.  When I attended last year’s Online Content for Creativity conference in Slovenia, I heard little enthusiasm for pan-European licensing from representatives of EU member states.  

Instead, I heard two distinct arguments against pan-European licensing.  One was that it is merely a ploy by American media giants to make it easier to cram their commercial, hegemonistic junk down Europeans’ throats.  The other was “We have to protect and promote our indigenous content, and we have little interest in content from other member states.”

What I didn’t hear from anyone was that Europe’s insistence on requiring content service providers to make 27 (and growing) separate deals in order to offer a service in Europe poses serious barriers to innovation.  Google can afford to “just say no” to the UK and Germany regarding music videos on YouTube, but startups can’t even afford the legal expertise required to enter into all those different negotiations.  And by the way, Google has a lobbying team in Brussels; startups don’t.

On the other side, Google is saying in effect that it can’t be bothered running music video content because its revenues from ads don’t make it worthwhile; therefore it will accede to copyright holders’ wishes and block the content from uploads, presumably using its implementation of Audible Magic’s audio fingerprinting technology.  

Moreover, Google refuses to be transparent about the actual number of streams viewed for royalty accounting purposes, data that it quite clearly has available.   This strikes me as a disingenuous negotiating ploy.  

Yet some of the European collecting societies have been accused — mainly by consumer electronics vendors, which pay levies on hardware and blank media — of the same lack of transparency concerning their record-keeping and payout practices.   Just last July, the European Commission issued an antitrust directive last July against the national collecting societies, all but calling them monopolists themselves.  

The true losers when these negotiations can’t be worked out, of course, are European consumers.

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