Here's why YouTube shouldn't screw over indie labels

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Starring an outraged Adele, an EU lawsuit and social media's tendency to distort information, the "YouTube vs. Independent Labels" fiasco that's played out over the past several weeks highlights most of what's wrong with the Internet these days.

In case you missed the brouhaha, here's a quick recap: YouTube is rolling out a streaming music service like Pandora, Rhapsody and Spotify. It'll be the same old song and dance as the others (free with ads, or pay $10 per month to listen commercial-free) -- except this one will be hosted on one of the Internet's most visited websites.

With Google money and a proven ad-delivery system, YouTube has signed deals for the rights to 95 percent of the necessary major and minor label catalogs of the Western world, but there are 5 percent of independent labels who are holding out, arguing that they're getting a raw deal -- one that's significantly worse than what the major labels are getting -- and YouTube won't negotiate.

The full contract was published by Digital Music News last Monday, and it highlights the nature of YouTube's offer. Basically: sign over global rights to the label's entire catalog and get paid less in royalties than the current per-view revenue-sharing model, or go pound sand.

Unsurprisingly, when one of the web's most popular sites threatens the accessibility of a substantial chunk of music available therein, vocal (pun intended) opposition mounts quickly. Artists, including Adele and Billy Bragg, spoke out against the move, generating a burst of bluster-inducing blog and social media posts.

The changes won't just hurt some bands you've never heard of either. There are some major artists would be affected if they don't sign on the dotted line, including Adele, Arctic Monkeys and Jack White, among others. How affected these artists -- or their fans -- will be depends on who is asking. Fans in search of Adele will still be able to find fan-posted songs/videos as well as a handful of her songs hosted on Vevo's channel (through a convenient corporate loophole). Contrary to early reports that non-compliant artists would be wiped from site, the new rules would only affect their official channels, not all of their content.

From the artists' perspective, they might as well be deleted from the site because YouTube has a plan to financially blackball them if they don't play along. Labels who don't sign over their rights to the streaming music service will never make another penny from YouTube.

In the existing revenue-sharing system, artists receive a cut of the money made by ad views generated from their videos. If you had a song with 300,000 views, and advertisers paid X to place an ad in front of that video, then you would get X divided by Y (where Y = the agreed upon rate of revenue shared) times 300,000. Pretty sweet. Except that's too generous an offer to make for a streaming music service that's still profitable.

Just ask Spotify. The streaming service's rates were so low for independent artists that Radiohead's Thom Yorke called the service, "the last desperate fart of a dying corpse," last year. As it turns out, the per-play price that YouTube is offering independent artists is even lower than what Spotify offers. You can make music, and Google/YouTube will gladly make money off of your creativity, but don't think for a second that they care enough to reciprocate those earnings.

Before the Internet, it was easier for companies to act as gatekeepers, limiting accessibility to physical distribution channels, marketing dollars and so on in order to profit from the work of artists -- but the Internet changed that. Independent artists and labels could distribute music on their own, release music videos, raise money and communicate directly with fans. And every single one of those abilities undercut the industry gatekeepers.

The Internet did more for independent music than any single technological development because it defeated geographical proximity as an obstacle for musical discovery. A person can grow up in a town with no live musical acts in it but still access music from around the world if they know where to look. But now that the companies who helped empower independent artists are beholden to share holders, the song and dance have changed. Suddenly, it's the crack model: every one got hooked on a taste for free, so now it's time to start charging.

From its earliest days, the Internet has been a fun, free place where people with all sorts of weird interests and fetishes could create virtual global communities of similarly minded people. But the foundation of that freedom is being eroded by the commodification of its channels and infrastructure. Just this week, popular music hosting site SoundCloud was called out for giving carte blanche to Universal records to flag unauthorized DJ mixes and remixes. And this is on the heels of the FCC's proposed changes to Net Neutrality standards, which would give Internet providers the right to charge a premium for faster delivery of content -- a change that will, over time, completely undermine the Internet's relatively level competitive playing field.

This YouTube debacle sucks: It sucks for YouTube because they're getting catastrophically bad press. It sucks for the independent artists who've agreed to the deal because they'll make less money now than they used to. It sucks for artists who won't compromise their rights, and who will lose revenue and visibility as a result. It sucks for consumers because a lot of quality content won't be available on a site where they spend a lot of time listening to music. But, what really makes this deal suck is that it's another step closer to a digital world that suffers from all the same problems it helped to fix for musicians and fans.

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