YouTube has failed to reach an agreement, with the Performing Rights Society (PRS) for Music, to renew their license to show music videos in the U.K. As a result of this they have blocked videos in the U.K.
Director of video partnerships at YouTube, Patrick Walker, told the BBC that the two sides were still in talks but the terms of the agreement were priced at a rate that was not sustainable.
At present, UK users who try to view music videos on YouTube just see an error message saying “This video is not available in your country.”
Google claims the PRS asked YouTube to pay a far higher amount than before, and executives at YouTube think this rate is not feasible. Walker says “YouTube cannot be expected to engage in a business in which it loses money every time a music video is played”.
The online video giant also blames the PRS for lack of transparency as they refuse to specify which songs would be included in the said license.
Steve Porter, head of PRS, on the other hand, says he is shocked and outraged by YouTube’s decision in the middle of discussions. He says that YouTube’s decision punishes British consumers and song writers. PRS says YouTube wants to pay significantly less than at present to music writers in spite of growth in their viewership.
While both sides are hurling allegations at each other, the Music Publishers Association has urged YouTube to reconsider their decision.
Other sites like Pandora.com and MySpace U.K. have also run into trouble getting licenses in the U.K. recently. YouTube, however, calims to have very strong relationships with 3 out of 4 major record labels and several independent ones. They say they will continue to seek partnerships that will benefit music publishers, music labels and artists.
The music industry remains one of the few major vertical that has managed to continue to operate as it did before the dot.com era, and continues to show much resistance to change. The advent of mp3.com and the ongoing drop in CD sales don’t seem to deter them or push them to change their business model.
Users may start uploading videos illegally if they are not allowed access to them legally. If that happens all parties would be the losers.
The current generation of youth are growing up on digital music, and seem to be accustomed to paying nothing for digital services and products such as digital music. Most of them don’t even think twice about the implication that music piracy is akin to theft.
If record companies continue to dig their heels in the sand and not give up their current business model, they are likely to fall spectacularly in the future, as artists find other ways to reach audiences and listeners find cost-effective means to hear their favourite singers without making record labels richer in the process.