Thanks for your comment. There are, of course, many unresolved issues between YouTube and the music industry. However, there was no suggestion that Google/YouTube shouldn’t pay for content. It had to do more with the fact that YouTube launched a service that ended up having massive amounts of commercial content but did not pre-negotiate royalties before launching. This put the record labels and publishers in a weaker negotiating position. They would like online services to work out royalty payments in advance rather than “beg forgiveness” later.

The problem is all of the ambiguity in defining what licenses you need to launch your service. This is a separate matter from the amount of the royalties, but it’s related through the economic concept of “transaction costs.” This was the point that Michael Heller made in his talk. He took it as axiomatic (as do I) that artists should be paid for their work. His issue was over the complexity and cost to assemble bundles of rights necessary to use content in innovative ways.

My 2cents is that the real problem here is that the means of distribution and production of all media have fallen in cost and increased in availability.

What this means is that the value relationships between the constituent parts of the chain from creation to reception have, from the creator and consumers perspective, changed – it’s the middle guys (think publishers and distributors) who are losing out here and (quite frankly) probably should.

When it costs next to nothing to package and distribute, why should publishers still receive the lion’s share of the end price?