YouTube has been in the music industry's crosshairs for months now as artists, labels and managers have openly criticized Google's video streaming service for royalty payouts they see as unsatisfactory compared to services such as Apple Music and Spotify. This week, that debate reignited after separate comments from rockers Trent Reznor -- who now holds the title of Chief Creative Officer at Apple Music -- and Nikki Sixx's new band Sixx:AM publicly slammed YouTube again.
On Monday (June 13) following Apple's presentation at its Worldwide Developers' Conference that included a design refresh for its streaming service Apple Music, Billboard asked Reznor about the YouTube debate. "Personally, I find YouTube’s business to be very disingenuous," he said. "It is built on the backs of free, stolen content and that’s how they got that big. I think any free-tiered service is not fair."
Putting Reznor's clear criticism of Pandora and Spotify aside (both offer a free tier), today (June 15) YouTube released a statement to Billboard pushing back against Reznor's "free, stolen content" claim, characterizing his comments as inaccurate. "The overwhelming majority of labels and publishers have licensing agreements in place with YouTube to leave fan videos up on the platform and earn revenue from them," the statement reads. "Today the revenue from fan uploaded content accounts for roughly 50 percent of the music industry’s YouTube revenue. Any assertion that this content is largely unlicensed is false. To date, we have paid out over $3 billion to the music industry -- and that number is growing year on year."
That $3 billion number should be familiar to those following this very public debate -- it's one that YouTube has cited often. However, that topline figure, while large (Spotify paid out $1.68 billion last year) and doesn't address the issue that many artists and creators have been raising. Last Friday (June 11), Sixx:AM released an open letter to Google co-founder Larry Page, who now serves as CEO for Google's parent company Alphabet, joining a growing list of artists that includes Katy Perry, Billy Joel and Debbie Harry, among others, as those protesting the "value gap."
"Artists from every genre are finding it impossible to pursue their art in a world dominated by YouTube," the band writes, noting that YouTube pays one-sixth of what artists get from Spotify and Apple Music. (The artists didn't specify "Without changes, young musicians will no longer be able to make music for a living and the next generation of fans will be robbed of great artists. Dreams of breaking into the music industry will effectively be unattainable."
Sixx:AM then listed nine specific complaints about the service, taking aim at the "antiquated" DMCA and noting that in 2015 alone, Spotify paid out $1 billion to the music industry (ahem, see above), while YouTube's $3 billion contribution is a cumulative number over several years. That letter also prompted a response from YouTube, this one sent to Music Business Worldwide.
“The voices of the artists are being heard, and we’re working through details with the labels and independent music organizations who directly manage the deals with us," it reads. “Having said that, YouTube has paid out over $3 billion to the music industry, despite being a platform that caters to largely light music listeners who spend an average of one hour per month consuming music -- far less than an average Spotify or Apple Music user. Any comparisons of revenue from these platforms are apples and oranges.”
As streaming revenue continues to account for more and more of the music industry's digital income, YouTube's negotiations with the labels -- still, at the time of this writing, ongoing -- are reaching a critical juncture, and other industry figures are becoming more forceful in their anti-YouTube verbiage. ("It's a system that is rigged against the artists," mega manager Irving Azoff told Billboard recently.)
"We are glad to hear that YouTube is listening," Sixx:AM wrote in response to YouTube's statement. "But actions speak louder than words." Those actions, while forthcoming, can't arrive soon enough.