Renews deal without hope of 'free-market' negotiation.
Warner Music Group has extended its recorded music and publishing deals with YouTube, according to the video platform and a memo from WMG CEO Stephen Cooper obtained by Billboard.
While the memo didn't go into the exact terms of the deal, it did say that following "months of tough negotiations" the music corporation has come to terms with YouTube for both its Warner Music record labels and Warner/Chappell music publishing divisions.
The memo said WMG was able to secure "the best possible deals under very difficult circumstances" and that term for the deal is shorter so to allow for "more options in the future."
At the same time the memo expressed frustration with YouTube, deriding the Millennium Copyright Act of 1998 and its "safe-harbor" provisions which allow digital services leeway in hosting and taking down unlicensed content.
Cooper wrote: "There’s no getting around the fact that, even if YouTube doesn’t have licenses, our music will still be available but not monetized at all," he wrote. "Under those circumstances, there can be no free-market ‘willing buyer, willing seller’ negotiation."
Neither of Warner's major competitors, Universal Music Group or Sony Music Entertainment, have reached new deals with YouTube and are still operating on a month-to-month basis, sources say.
YouTube said in a statement that it was "pleased" to have renewed the deal, which it said paves the way for it to expand its YouTube Red subscription service overseas, and noted the platform paid the music industry more than $1 billion between December 2015 and December 2016.
News of the deal was disappointing to some music-industry executives, many of whom have been concerned about the declining rates YouTube pays when calculated on a per-stream basis. Record labels and artists have been lobbying lawmakers in Washington to reform the copyright law that protects sites such as YouTube from liability when their users upload content without permission from rights holders. That protection has given YouTube more leverage in licensing negotiations, label executives say.
According to the IFPI's latest Global Music Business Report 2017, user-uploaded video streaming services operating under safe harbor legislation returned $553 million to rights holders in 2016 from a global audience of over 900 million users. The disparity between that return and the $3.9 billion that rights holders received globally from streaming services in the same 12 month period is enormous-- especially considering that streaming has far lower user base of around 200 million.
The memo said these latest negotiations were "proof positive of the acute need to clarify ‘safe harbor’ provisions under US and EU copyright legislation. That’s the only way to conclusively close the gap between the revenue YouTube generates and what songwriters, artists, publishers and labels make in return."
The deal is the first struck with a major label since Lyor Cohen, the former CEO and president of recorded music at Warner Music Group, was named YouTube's head of global music last September. But Cohen hasn't been leading the licensing negotiations, sources say. Instead he is focused on helping record labels and artists use YouTube more effectively as a marketing tool.