LONDON – A YouTube executive refuted claims that the video platform compensates artists less than competitors like Spotify, while acknowledging a “problematic” lack of transparency in the share of industry payouts going to artists and songwriters.
Appearing in a U.K. Parliamentary probe into the music streaming business on Wednesday (Feb. 10), Katherine Oyama, director of government affairs and public policy at YouTube, told MPs that the service’s royalty rates are “absolutely on a par” with Spotify and other digital streaming platforms.
Oyama, who gave testimony to the Parliament’s Digital Culture, Media and Sport (DCMS) Committee, was responding to claims by labels trade body BPI that, on user uploaded content, YouTube was paying as little as 1/10th what Spotify and other services pay U.K. labels and artists for an audio stream.
Earlier in Wednesday’s session, Geoff Taylor, BPI’s chief executive, detailed how YouTube was paying rights holders around £0.0005 (0.05 pence or 1/20th of a penny) for every video uploaded by users, compared with around half a penny per audio stream on other services.
Asked by committee chair Julian Knight if she could confirm that YouTube pays 0.05 pence per ad-supported stream, Oyama said “it does not sound right to me,” while noting that advertising rates fluctuate across global markets.
When Oyama was unable to clarify what YouTube’s actual per-stream rate is, Knight said the executive was “not being transparent” with the committee. “It’s astounding that you don’t actually know the level,” Knight said. “Or can we read into this that you do not want to say, because, frankly, it would expose the fact that you are making an absolute fortune from other people’s work?”
Oyama responded: “All the evidence I’ve seen is that we are on a par with other services, including Spotify.”
The tense exchange came at the close of an otherwise cordial three-and-half-hour hearing that formed the latest chapter in a Parliamentary probe into the financial impact that streaming services like Spotify, Apple Music and YouTube have on artists, record labels and the wider music industry. Wednesday’s session was the first time that executives from digital and streaming platforms have faced questioning from Parliament members. Raoul Chatterjee, vice president for content partnerships at SoundCloud, answered questions alongside Oyama.
The hearing also saw testimony from Horace Trubridge, general secretary of the Musicians’ Union, Graham Davies, chief executive at Ivors Academy and Roberto Neri, chair of the Music Publishers Association. The witnesses all testified virtually due to the current U.K. COVID-19 lockdown.
According to the BPI, YouTube accounted for more than 30 billion streams of music videos in the U.K. in 2019, but generated just £35 million ($48 million) for British labels and their artists. That’s around half what U.K. labels earned from vinyl LP sales in 2019 and represents just 5.5% of label streaming revenues, says BPI.
“The differential between what YouTube pays and what Spotify and Amazon Music and other services pay is so huge,” Taylor told the MPs.
Part of the problem, he said, are safe harbor provisions that have “resulted in a massive underpayment by YouTube to the music industry.” Taylor urged government regulators to strengthen rules around safe harbor and put “proactive” notice-and-stay-down obligations on platforms to combat piracy.
In written testimony, YouTube says it paid out a total of $12 billion to music rights holders from its advertising and subscription business as of January 2020. The Google-owned company predicts it will become the industry’s main source of revenue by 2025.
Nevertheless, the company acknowledges concerns about artist-versus-label compensation. “We recognize that the lack of transparency between the money YouTube pays out to the industry and the money that artists and songwriters see in their pocket remains problematic,” Oyama says in a statement sent to Billboard after Wednesday’s session. “We welcome more transparency in the industry and remain committed to providing granular data to all our partners — large and small — which shows where in the world their viewership comes from, how it was monetized, and at what rate.”
Earlier inquiry sessions saw testimony from Chic co-founder and producer Nile Rodgers and members of rock bands Radiohead and Elbow, as well as executives from all three major labels. Last month, one committee member accused David Joseph, chairman and chief executive at Universal Music U.K. and Ireland, of “living in cloud cuckoo land” for claiming artists were “very happy” with major label deals.
Aside from oral testimony, the committee has also received just under 200 written submissions from music companies, artists, songwriters, publishers and digital music services, including entries from BMG, Beggars Group, PRS for Music and IFPI. The submissions have run the gamut, including analysis of the flow of streaming revenues and the relationship between record labels and the DSPs.
Executives from major streaming platforms Spotify and Apple Music have yet to appear before the DCMS committee, but they are expected to be called for interviews in a future hearing.