If you search for “Call Me Maybe cover” on YouTube, you wouldn’t be surprised to be hit with thousands of results. But what is a little bit unexpected is that you have to dig through hundreds and hundreds of these videos to find a version of the song without some advertising — even for videos with a few hundred views.
That wasn’t always the case. With YouTube usage still growing by leaps and bounds, some copyright owners have had to become proactive in claiming their songs in order to make sure songwriters, artists and the owners themselves get a chance to monetize popular user-generated videos.
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The owner of Carly Rae Jepsen’s “Call Me Maybe,” Universal Music Publishing Group (UMPG), has spent months working on a strategy to ensure its songwriters can share in advertising revenue opportunities often missed when cover versions of their songs are performed on the Google-owned video platform.
YouTube has a content management system fueled by songs, film and other intellectual property formats supplied by the copyright owners, which are fingerprinted and stored in the site’s CMS database. When a video is uploaded to the site, the CMS automatically scans it and matches it to identify copyright owners.
Such videos that enter YouTube’s inventory can be monetized by the placement of ads either in a pre-roll video or with a tag or banner during its playback.
But with 70 hours of video being uploaded each minute and much of those user-generated videos containing covers of the songs and not the original recordings, YouTube’s CMS can’t always identify a song based on the melody. If the song and thus the copyright owners aren’t recognized, those videos don’t have any advertising placed against them and thus aren’t monetized.
By some estimates, YouTube’s CMS correctly identifies as much as 60%-70% of uploaded videos-but that means that some 30%-40% aren’t identified, resulting in lost revenue.
The unmonetized videos represent an opportunity that some entrepreneurs have seized and built businesses around. While large major and indie labels and music publishers have their own YouTube account and can access the site’s CMS, most copyright owners don’t have access. Consequently, companies like AdRev, ONErpm, ZEFR and the recently launched Audiam (which have direct accounts with YouTube) are offering their services to large and small labels, as well as indie acts.
But those services can charge from 15% to 25% of collected revenue, and some copyright owners think that the dollar opportunity for these services is so large, they have started their own in-house efforts to accelerate the monetization of their music.
After the cost of raising advertising revenue is eliminated, about 60% of what remains is paid to music copyright owners, with a split of about 45% going to master rights owners while 15% goes to music publishers when the master recording is used in a user-generated video. In a video containing a cover version, publishers get 50% of the revenue.
Wall Street analyst Rory Maher of Hillside Partners estimates YouTube’s gross revenue will likely be $3.7 billion in 2013. It’s unclear how much of that is specifically generated by advertising placed against videos with music content. But based on proprietary industry data, Billboard estimates YouTube paid $500 million in revenue to U.S. record labels and publishers in 2012.
With that kind of money at stake, companies like UMPG, Bicycle Music and Delicious Vinyl have created in-house departments to try to identify all videos using their copyrights.
UMPG, the world’s second-largest music publisher, set up a digital rights services (DRS) department, which consists of a four-person team that spends all of its time making sure videos using its songs are monetized.
“We see a lot of things falling through the cracks, which is why we created this team,” UMPG chairman/CEO Zach Horowitz says. “If a song isn’t detected within the first 24 hours of it being uploaded, chances are it won’t be tracked and monetized unless it’s done manually.”
According to David Kokakis, UMPG senior VP and head of business and legal affairs/business development, who oversees the DRS team, the department has three areas of priority: detecting the company’s songs that aren’t initially tracked by YouTube’s automated scanning and matching tools, cleaning up disputed claims and responding to situations where a song gets hot fast, setting off an explosion of user-generated videos with thousands of covers and parodies.
In the lattermost case, copyright owners have to be proactive and manually claim videos containing their songs that YouTube’s CMS fails to detect, Kokakis says.
“You snooze, you lose,” Horowitz says. “This is not like with the [performing rights organizations], where the money is put in escrow. If the music is unclaimed on a hot video, there is no going back to claim money because no ads were placed against it. There is a real urgency to the process, because a hot video may only have a short window for peak popularity. So if you don’t claim it and monetize it, that revenue is lost forever.”
Manual claims that otherwise might have represented lost moneymaking opportunities include UMPG’s DRS team finding and making 1,750 claims for videos using “Call Me Maybe,” 15,000 claims for videos using Baauer’s “Harlem Shake,” 4,500 claims for videos using Imagine Dragons’ “Radioactive” and 650 claims for videos using “It’s Time,” 1,550 claims for videos using Swedish House Mafia’s “Don’t You Worry Child,” 2,600 claims for videos using Hunter Hayes’ “Wanted” and 1,300 claims for Calvin Harris’ “Sweet Nothing.”
All in all, using keyword searches, the UMPG team is now claiming 30,000 videos a month through a laborious process that can take 18-22 clicks and as much as five minutes to claim a song. But that’s only in instances where a song is unclaimed. In disputes where a song is overclaimed — i.e., where the revenue split adds up to more than 100%, or when copyright owners claim the video in the wrong territories — it can take days to resolve.
There are many disputes over claims and it’s very chaotic, with much room for abuse.
In the past, copyright claims on YouTube might have been like the Wild West and the California gold rush all rolled into one, but YouTube is better at policing things these days. Also, thanks to the coordination within the publishing community, “we can smoke out the bad actors very quickly now and notify others, and they usually wind up with having their CMS account blocked,” one music publishing executive says. “The danger is not as great as it used to be.”
UMPG says the dedicated team and free service helps ensure its songwriters get compensated for the use of their music in all varieties of online media. “As a full-service music publisher, we owe it to our songwriters to maximize every revenue option and that is why we’re doing this at our own cost,” Horowitz says.
Others agree that there’s money to be made in manually claiming copyrights. Bicycle Music co-president Steve Salm says the company just hired someone to chase Bicycle’s unmonetized music employed in user-generated videos. But he says the person is likely to concentrate on the company’s master rights catalog than its publishing. “The masters’ money is so much bigger than the publishing,” Salm says. “You can see songs that have no commerce value on Amazon or iTunes with zero downloads, yet those songs can generate hundreds, if not thousands of dollars a month from YouTube.”
The other majors either leave the monetization process to YouTube, use outside services like AdRev and ZEFR to chase unmonetized videos or, for a particularly hot video, may occasionally step in and manually claim copyrights to ensure monetization.
Sony/ATV, the world’s largest music publisher, takes a different approach to UMPG. “We work with YouTube and improve the exchange of data so it’s automatically claimed, so you’re not [faced with] the problem of hiring people to manually search for things,” says Peter Brodsky, executive VP of business and legal affairs at Sony/ATV Music Publishing.
Brodsky says Sony/ATV also claims some user-generated videos on its own, and that it’s in discussions with third parties to do it for the company.
But the amount of videos unclaimed is so large, you can chase your tail and never catch up, one executive says. A bigger problem, according to the executive, is third parties claiming videos that they have no right to. “Any video of note with more than 100,000 views somebody is claiming, whether that is through the automated YouTube CMS or manually by some third party.” The latter claims are the ones that need to be cleaned up, the executive adds.
ONErpm CEO Emmanuel Zunz says his company mainly depends on YouTube’s automated system, although if it’s needed, his company can accelerate the CMS review.
When UMPG began its effort last October, it was unsure whether it would pay for itself. But “in the last six months, we have generated hundreds of thousands of dollars from videos that otherwise would not have been monetized,” Kokakis says.
During that time, it has identified and claimed 150,000 user-generated videos using UMPG songwriters’ songs. It has also verified an additional 100,000 claims through manual review.
Beyond its own in-house efforts, UMPG says it has taken a leadership role in the industry, coordinating a biweekly conference call with about 20 other publishers, societies and the Harry Fox Agency, which is often the administrator for user-generated videos on YouTube, to clean up songs with claim mistakes. “We review together a queue of songs with conflicts and adjust claims so that we can walk away with better data and claims,” Horowitz says. “It’s a never-ending process, but we have found this collaborative approach is much more efficient for our songwriters.”
Moreover, there might still be money on the table — industry sources estimate “tens of millions of dollars.”
“The more you accurately claim, the more revenue you generate,” Kokakis says. “This is a scalable business. As we ramp up the department and add more members to the team, the revenue will grow.”