YouTube IFPI music industry

YouTube says it paid the music industry $1 billion in 2016, music industry says “Huh?!”

YouTube and record labels continue their ongoing cold war.

- Dec 8, 2016

YouTube announced Tuesday that over the past 12 months it's paid out more than $1 billion USD in ad revenue to the music industry. The press release, issued by Chief Business Officer Robert Kyncl, reads like a grand hurrah — a corporate success, a social benevolence — but some reps from the music industry have quickly shut down the parade with a resounding "Huh?!"

The International Federation of the Phonographic Industry, a London-based trade group representing the recording industry worldwide, responded Wednesday with a statement that begins by calling YouTube's numbers "unexplained." And if that is the case, it continues, it's not nearly enough.

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"With 800 million music users worldwide," the IFPI says, "YouTube is generating revenues of just over US$1 per user for the entire year," far less than other streaming services like Apple, Deezer and Spotify. In 2015, for example, Spotify paid $2 billion USD to record labels, the statement says. That's $18 per user.

In the royalty game, this inequity is referred to as the "value gap." The IFPI wants legislative action to address royalty rates so rights holders get fair compensation for their work market-wide.

Much of the argument revolves around the question: what is YouTube? Is it a direct competitor to Spotify and Apple Music in the streaming marketplace — as many in the recording industry contend — or is it a fundamentally different service, as the company itself argues. When it comes to paying rights holders and artists fairly for their work, does it even matter?

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