Google has waded into another row over music royalty rights in Europe, this time in Germany. Again, it has shut off premium music videos on the YouTube service as it negotiates with the local rights agency, Gema, over how much it has to pay for each video. It did the same thing in the UK two weeks ago.
Like any payment dispute, this is grubby. The rights agencies want more money for their musicians and songwriters. Google wants to pay less – preferably a flat fee – and argues that YouTube doesn’t make enough money to pay any more.
Music fans are confused. They like getting things for free, and were initially angry that bureaucratic rights agencies were getting in the way of their YouTube fun. A large number of artists, however have started speaking up through the Fair Play for Creators campaign and making the point that they do deserve some payment when their material is used – even on the internet.
A lot of music fans have come to see the record industry and musicians as over-paid and greedy. The memory of expensive CDs and fat-cat record executive lifestyles makes a lot of people see free copying of music as an acceptable way of sticking it to the system. It is hard for the record industry to get sympathy.
At the same time, Google has managed to position itself as the consumers’ friend, the fun, young, technology company that gives them things for free. A lot of people still believe the “Don’t be evil” motto. It is easy to sympathise with Google.
But strip away some of the sentiment and things are a little more clear. Artists do need some payment for their work. Otherwise they will not survive. A flat fee does not allow them to share in any upside as more and more videos are viewed online. It would, however, cap Google’s costs and help them make more money. It’s a simple case of Google trying to drive down its supply chain costs.
Imagine Google were a supermarket and told dairy companies it wanted to pay a flat fee for milk - while actually increasing the amount it was ordering. The dairy companies would find this difficult to accept. It would matter little to them if the supermarket argued that it was making a loss on the milk. Many supermarkets sometimes actually take losses on goods like bread and milk – as loss-leaders, these items entice people into the store to spend money on other, more profitable things. The supermarkets are still required to pay the suppliers.
Whether the YouTube business model ultimately works for Google, either directly or indirectly, is another debate. But it is useful not to see the European music video black-out as a grand plan for Google to champion people’s “right” to free music. Its a business negotiation and it is about saving money.
