From The Wall Street Journal:
The music industry is locked in an epic battle with YouTube, the most popular on-demand service, over the declining royalty rates the site pays per stream as it grows, and the difficulty in detecting copyrighted material from the mass of videos uploaded on the site.
The site voluntarily offers record labels a system to automatically block, monetize or mute their music on the site, matching audio files with 99.7% precision, the service says, and a chance for labels to cash in on user-uploaded content instead of merely resorting to sending takedown notices.
But many music rights holders say the YouTube system isn’t foolproof and requires them to conduct a laborious, manual search daily to track content and collect royalties. They worry that YouTube gains an unfair advantage with the lower rates it pays for music over other on-demand streaming services such as Spotify and Apple Music, which pay far more per play but together have relatively fewer paying subscribers at 68 million, according to the International Federation of the Phonographic Industry’s latest report.
The music industry believes its future lies with these streaming services rather than YouTube, which they fret is conditioning fans to not pay for on-demand tunes.
But YouTube, a unit of Alphabet Inc., with its more than 1 billion users, packs clout and reach that the industry can’t ignore. YouTube says it has paid about $3 billion to music companies since it launched a decade ago, and today half of its payout comes from user-generated content identified by its system called Content ID.
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Although the Alphabet unit pays out more overall each year, it now pays an average of eight one-hundredths of a penny ($0.0008) per play, and less than six one-hundredths ($0.0006) of a penny for user-generated content, down roughly 20% from a year ago, people familiar with the matter said.
The free tiers from SoundCloud and Spotify, by contrast, pay at rates up to six times the rate YouTube offers for user-uploaded videos, one rights holder said. Another said it gets an average of 35% more per play ($0.0011) from these free services than it does from YouTube videos. Paid subscription services pay even more per play, according to rights holders.
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But many in the music industry say the system isn’t automatically identifying many of their recordings when users have altered or combined them—or occasionally for no apparent reason at all. Furthermore, labels charge that Content ID doesn’t scan the YouTube channels managed by major TV networks and smaller networks such as Fullscreen and AwesomenessTV, many of which feature amateurs covering popular songs.
Link to the rest at The Wall Street Journal