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PRS For Music could this summer reduce the rates online services must pay it – but the royalty collector isn’t convinced sites can make enough from advertising to finance their outgoings…
When YouTube went public with its PRS rates spat this month, several online services told us the royalty collector could earn more overall for artists by reducing the amount charged per-track. With the current online license due to expire on June 30, Andrew Shaw, PRS’ broadcast and online MD who coordinates the fees, told paidContent:UK “If that (overall growth) happens, then, yes, reducing the fee might be an appropriate way forward. But one of the big questions the whole industry is asking at the moment is around the sustainability of advertising-subsidised models. Internet advertising has slowed and we’re not going to see double-digit growth.”
— Where do the YouTube negotiations stand today?: “We are continuing to talk with them. When the story broke, we put in place a whole series of meetings to ensure the momentum keeps going.” The pair have met three times since YouTube yanked music videos and more meetings are scheduled this week. “We were very surprised by the action YouTube took. We hadn’t threatened takedown (of videos), it hadn’t even been a feature of the discussion up until that point. During the time they were in license, they were a model licensee. The action they took was carefully timed to cause maximum effect with minimum disruption to the service.”
— Rates reform may come this summer: What next, after the imminent expiry of the so-called joint online license (JOL), which had not governed YouTube but which sets fees other services must pay? Shaw said he will draw up a new license, but it’s so far unclear whether terms will change – the next version could be identical to the current one, or it may differ based on evidence gathered from fee-paying online services over the last couple of years.
And therein lays a problem: “Our big frustration is, many of our licensees have not been forthcoming with the information we need to make an informed decision on how we update the JOL.” The danger is clear – if PRS introduces a new license that services find objectionable, the sites may lodge a complaint with the UK Copyright Tribunal, the body that mandated the current license only after an eventual industry agreement in 2007, and everything would be on the table again.
— What could YouTube’s new license look like?: Shaw declined to say whether YouTube would end up paying an advance fee, like the deal it brokered in 2007, or monthly fees. “We are asking YouTube to pay for every time that they use our members’ work – a very small fee, but to pay nonetheless. We are looking at lots of different options for calculating the license, and we want to make sure we can put together a package of rights for Google (NSDQ: GOOG) in the way its business operates.
When YouTube took the action earlier this month, it said PRS was demanding more money – on the contrary, PRS said YouTube was offering offering less – so where’s the truth? “There are lies, damned lies and statistics,” Shaw said. “By virtue of their exponential increase in video streams, in aggregate that amounts to an increase over the previous license fee.”
— Advertising and making YouTube tick: “When we did our original deal, there were a number of unknowns – the tribunal decision was unknown, Google had only just bought YouTube and hadn’t started their plans to monetise YouTube so they didn’t know how or if their plans were going to work, and none of us had any idea how many streams it was serving at that time or how its future growth was going to look like.
“YouTube have pointed to a much bigger issue, which is how an organisation like theirs can make money in an ad-supported way. They are picking a fight on the basis of wanting to pay a percentage of whatever they can make (rather than a set fee for each track). Our members should not be forced in to a position where they subsidise services whose models don’t work. Fundamental to any new scheme has got to be that songwriters get paid every time their music is used. Advertising revenue is under pressure everywhere, but you would have to think that a company like Google is probably better placed to weather that storm than any others.”