Man Bites Dog, Lyor Wants an Audit and YouTube is Good For You
They say it’s news when man bites dog, but it is also news when Lyor Cohen invites YouTube audits–or maybe even an SEC investigation. Crazy, you say? Not really.
Google is pushing how profitable YouTube is and YouTube CEO Susan Wojcicki is in turn pushing how much of Google’s revenue gets paid to creators. Both these things are odd. Or maybe that non prosecution agreement finally got signed or the statute of limitations has passed, who knows.
But Lyor seems to think promoting how much YouTube has paid to artists is going to make people feel better. More like makes people more likely to sue or at least audit (if they can) because nobody believes it. Plus, even if you can audit them (which most people can’t as Rights Flow executives revealed at an A2IM meeting many years ago), YouTube will never let you actually confirm how their advertising revenues were calculated.
Susan has a blog post about how groovy it all is–remember how YouTube got started? Why? Because “[w]e’re also partnering with artists to support and amplify their work through every phase of their career.” Whether the artists like it or not. But it’s her trip down memory lane that’s particularly interesting and calculated to make YouTube charming. Kind of like a chia pet with fangs that grows the more money it takes from you.
15 years ago today, YouTube took a small step toward starting something big. On February 14, 2005, YouTube was registered as a website. Its founders wanted to create a way for people around the world to share videos. Soon after, the first video — “Me at the zoo” — was uploaded, and before the end of the year, the site was receiving millions of views a day.
Yes, we remember! We remember these plucky little startup emails, too:
• In a June 15, 2005 email to YouTube co-founders Steve Chen and Jawed Karim, YouTube co-founders Chad Hurley stated: “So, a way to avoid the copyright bastards might be to remove the ‘No copyrighted or obscene material’ lìne and let the users moderate the videos themselves. legally, this wì1 probably be better for us, as we’ll make the case we can review all videos and tell them if they’re concerned they have the tools to do it themselves.”
• In a June 20, 2005 email to YouTube co-founders Chad Hurley and Steve Chen, YouTube co-founder Jawed Karim wrote: “If we want to sign up lots of users who keep coming back, we have to target the people who will never upload a video in their life. And those are really valuable because they spend time watching. And if they watch, then it’s just like TV, which means lots of value.”
• On June 21, 2005, YouTube co-founder Jawed Hohengarten, Karim stated in an email to YouTube co-founders Chad Hurley and Steve Chen that “Where our value comes in is USERS…. [O]ur buy-out value is positively affected by … more Youtube users…. The only thing we
have control over is users. We must build features that sign up tons of users, and keep them coming back.”• On July 4, 2005, YouTube co-founder Chad Hohengarten Hurley sent an email to YouTube co-founders Steve Chen and Jawed Karim titled “budlight commercials,” stating “we need to reject these Hohengarten too” Steve Chen responded by asking to “leave these in a bit longer? another week or two can’t hurt;” Jawed Karim subsequently stated that he “added back all 28 bud videos. stupid…,” and Steve Chen replied: “okay first, regardless of the video they upload, people are going to be telling people about the site, therefore making it viraL. they’re going to drive traffic. second, it adds more content to the site. third, we’re going to be adding advertisements in the future so this gets them used to it. I’m asking for a couple more weeks.”
• In a July 10, 2005 email to YouTube co-founders Chad Hurley and Steve Chen, YouTube co-founder Jawed Karim reported that he had found a “copyright video” and stated: “Ordinarily I’d say reject it, but I agree with Steve, let’s ease up on our strict policies for now. So let’s just leave copyrighted stuff there if it’ s news clips. I still think we should reject some other things tho. . .”; Chad Hurley replied, “ok man, save your meal money for some lawsuits! 😉 no really, I guess we’ll just see what happens.”
• In a July 23, 2005 email to YouTube co-founders Steve Chen and Jawed Karim, YouTube co-founder Chad Hurley responded to a YouTube link sent by Jawed Karim by saying: “if we reject this, we need to reject all the other copyrighted ones…. should we just develop a flagging system for a future push?”; Karim responded: “I say we reject this one, but not the other ones. This one is totally blatant.”
• In a July 29, 2005 email about competing video websites, YouTube co-founder Steve Chen wrote to YouTube co-founders Chad Hurley and Jawed Karim, “steal it!”, and Chad Hurley responded: “hmm, steal the movies?” Steve Chen replìed: “we have to keep in mind that we need to attract traffic. how much traffic will we get from personal videos? remember, the only reason why our traffic surged was due to a video of this type…. viral videos will tend to be THOSE type of videos.”
So remember those days when Google evaluated acquiring YouTube? Susan does! She was in at the beginning!
As YouTube began to take off, it became clear that the company would need significant capital investment to support its growth, so YouTube decided to sell to another company. I, along with Salar Kamangar, made the case to bring the companies together. After the acquisition, founder Chad Hurley became CEO, then Salar, and I was incredibly honored to become YouTube’s third CEO six years ago.
Yes, Susan, we remember those heady days when Google was buying YouTube! Since you were on the Google team, remember this from Viacom’s discovery? (Of course, Susan’s private trip down memory lane probably has so much more detail!)
And then there was this?
No, we remember, too, Susan. We remember, too. We have to congratulate you for keeping the YouTube startup culture firmly in place.
Attention @USTradeRep: Songwriters and Publishers Call on Canadian Parliament to Ratify the Canada-U.S.-Mexico Agreement to Close Copyright Loophole
We’ll be coming back to this soon, but readers should be aware that there’s a loophole in Canada’s Copyright Act that can be closed immediately through the the USMCA trade agreement. Canada has an odd anachronism in the copyright term for works other than sound recordings–unlike the majority of Canada’s trading partners, Canadian copyright is based on the old life plus 50. (Sound recordings are 70 years from release, essentially.)
What this means is that songs lose copyright protection in Canada 20 years earlier than the rest of the world. USMCA fixes that by harmonizing Canadian copyright term with other Commonwealth countries, Europe, Japan and the US, plus Mexico (which has a longer term).
But–USMCA also has a 30 month transition period from the effective date–and there’s the loophole for Google. For procedural reasons, the implementing legislation was just introduced in the Canadian Parliament even though Prime Minister Trudeau signed the agreement in 2018. The 30 month transition period is not relevant for extending the copyright term unless the Trudeau government is trying to slow walk the implementation. Or got happy feet on the copyright extension due to lobbying pressure from you know who. Why might they slow walk the implementing legislation? Maybe so that Google can rally the anti copyright troops (in the form of Michael Geist of the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic at the University of Ottawa, which has already happened. And yes, that “Samuelson” is Pamela Samuelson. Small world, ain’t it?).
Google has already successfully lobbied a trade off for copyright term extension (and national treatment) in return for exporting their bogus interpretations of the DMCA and Section 230 that Google uses for profiting from infringement and human trafficking, respectively. Now, of course, they’d like to reneg on the copyright term extension part. (You can tell because Geist loves him some Section 230 and opposes term extension as bad for Canada. How exactly?)
Given that there’s already been a long delay between signing and legislating a trade agreement that Canada’s other two partners have passed, there’s really no reason for further delay in implementing the harmonized copyright term beyond the minimum required votes in Parliament–certainly not another 30 months after enactment. “Life of the author” may seem like an abstract concept, but Neal Peart’s passing reminds us not only of the tremendous contribution to our business by Canadians, but also the march of time. No reason to wait another 30 months.
So the Songwriters Association of Canada, the Screen Composers Guild of Canada and publishers posted this open letter. Let’s keep an eye on this issue and support their efforts.
Dear Parliamentarians,
On behalf of tens of thousands of songwriters, composers and music publishers in Canada, we welcome you back and most of all wish you a productive Parliamentary session.
We thank the government for signing the Canada-U.S.-Mexico (CUSMA) trade agreement last year. Under it, copyright in Canada will be strengthened by extending the term of protection by 20 years, to the life of the author plus 70 years.
What does this mean for innovation in Canada?
Canadian songs and scores are heard daily on the radio, on streaming services, in video games, and in film, television and other screen-based productions around the world.
Modernizing the Copyright Act to ensure Canadian rights holders have the same protections as their international competitors is a much-needed move to help Canadian creators, and the companies that invest in them, to continue exporting their creations around the world. A forward-looking, digitally attuned copyright regime will foster Canadian innovation, investment, and growth in a key economic sector for our great country.
It is imperative that CUSMA be ratified quickly to ensure that Canadian songwriters, composers and the small and large businesses that invest in music publishing are properly compensated for their work. The term extension provisions in CUSMA should be enacted immediately, without unnecessary delay and with no conditions.
Adding another 20 years to the life of a copyright means a robust creative sector, more Canadian cultural exports, and the growth of many innovative businesses that have embraced the digital market. It is long past time for Canada to catch up to its international trading partners in this respect.
CUSMA presents an amazing, tangible opportunity to expand Canada’s music publishing industry, invest more in emerging songwriters and composers and make our Canadian companies even more competitive globally. We urge all Parliamentarians to make the early ratification of CUSMA their top legislative priority.
Sincerely,
OPEN LETTER TO MPS AND SENATORS OF THE 43RD PARLIAMENT
The Singularity is Nigh: Amazon Fake Brand Personality Follows China’s Fake News Presenter with US Right of Publicity Infringement
Remember when China’s Xinhua News Agency debuted its first AI news presenter modeled after real Xinhua anchor Zhang Zhao (taking “fake news” to a whole new level)?
Not to be outdone, Amazon has taken fake presenters to a whole new level–fake endorsers! No more celebrity endorsers with their inflated fees for endorsing products they may or may not care about. Oh, no. Amazon goes all the way to fake on a one way trip to Minority Report-land. According to Venture Beat:
If Amazon has its way, companies will soon tap Amazon Web Services (AWS) en masse to create voices tailored to their brands. The Seattle tech giant today launched Brand Voice, a fully managed service within Amazon Polly, Amazon’s cloud service that converts text into lifelike speech, that pairs customers with Amazon engineers to build AI-generated voices representing certain personas….
But this is the most ridiculous part of the story:
Such technology has obvious commercial implications. Brand voices — such as Progressive’s Flo, who is played by actress and comedian Stephanie Courtney — are often tasked with recording phone trees for interactive voice response (IVR) systems or e-learning scripts for corporate training videos. Synthesization could boost actors’ productivity by cutting down on ancillary recordings and pick-ups (recording sessions to address mistakes, changes, or additions in voiceover scripts) while freeing them up to pursue creative work — and enabling them to collect residuals.
Right. See, Amazon’s just trying to be helpful. Because the actors will still “collect residuals”. Really? (Remember Fraley v. Facebook when Facebook ripped off the right of publicity of millions of its users? If they’ll do that, what makes you think that Amazon’s true motivation is to help actors “collect residuals” rather than not pay actors at all?)
And if that’s even true, how long to you think that’s going to last? It’s a rather selective fact choice anyway because the real question is how much longer until the actor is replaced altogether and how close can the fake AI actor get to the original before its a right of publicity case?
Even that issue will probably not be around for very long–the direction is to replace the actor altogether like Max Headroom.
So why is this man laughing at you?
@realrobcopeland: WSJ Reports Google Reveals YouTube Revenues of $15 billion of Value Gap, CEO Wants More–Where’s Ours?
[Editor Charlie sez: This post first appeared on ArtistRightsWatch.com]
Very insightful reporting from Rob Copeland at WSJ on Google’s revenue that culls out YouTube’s share of Google’s revenue–and boy are we getting hosed.
Alphabet said YouTube exceeded $15 billion in annual revenue in 2019. That would be on the lower end of projections for the video business, which has been the subject of educated guesses for years, and suggests that YouTube pulls in less than $8 a year from each of its 2 billion users. On a call with analysts, Mr. Pichai said he believes there is “significantly more room” to make money off YouTube’s users.
Read the post on the Wall Street Journal.
Given that YouTube is heavily dependent on music videos, it’s hard to explain how YouTube is dead last in royalty rates:
And remember, according to BrandWatch, “[a]s of Jan 2020, the 93% of the most-watched videos [on YouTube] were music videos” and according to IFPI’s Music Consumer Insight Report, 47% of time spent by fans listening to on-demand music is on YouTube. So it’s hard to explain why YouTube royalties are so low–and I would actually say that YouTube royalties are actually negative when you take into account the total cost of dealing with YouTube on DMCA, Content Management System and Content ID.
If you can afford it–remember the A2IM and Future of Music Coalition study that showed the main reason that independent’s don’t pursue their rights is because they can’t afford to. Not a big leap that they definitely can’t afford to challenge Google.
It’s all a little hard to understand. Even at 1% of YouTube revenue for publishing, comparable to the low public performance royalty at radio (distorted by the radio oligopoly), the songwriters alone should divide up $150,000,000–in a comparable deal. Artists should be grossing well over that in line with historical ratios. Given the outsized impact of music on YouTube’s revenue, shouldn’t the total industry-wide royalty payment be vastly more than $150,000,000? Why do we get hosed so badly on YouTube revenues? My bet is that it’s not at the negotiator level. Those are some of the most talented negotiators in the world.
But they’re on a leash and Google knows it. It’s always seemed to be a situation where eventually someone upstairs calls and says, thanks for the great work on YouTube negotiation–we’ll take it from here. And you see the result. Hard to explain any other way.
But it may help to explain why this person is laughing at us.
Andre Paine: @IMPALAmusic’s Helen Smith on how Brexit will impact the indie sector
With just days to go until Brexit at 11pm on Friday, January 31, there’s still uncertainty surrounding key areas for the music industry.
As revealed in the latest issue of Music Week, the biggest issues for the sector once the transition period concludes at the end of the year include touring, employment restrictions on EU nationals and trading arrangements for physical music.
The latest flashpoint is the news reported by Music Week last week that the Copyright Directive will no be implemented by the government. Culture minister Nigel Adams pledged to protect music creators online.
At a turbulent time for the independent sector, European trade body IMPALA will be working alongside AIM to support labels in the UK. Here, executive chair Helen Smith reveals the crucial issues for independent labels and how the trade body can help…
Read the interview on MusicWeek
For the US perspective on the relationship between Brexit and the USMCA see Chris Castle’s letter to Congress.
@musicbizworld: BMG RESPONDS TO ARTIST STREAMING REVOLT IN GERMANY: ‘IT IS TIME FOR RECORD COMPANIES TO CHANGE.’
[Editor Charlie sez: Rather than rearranging the deck chairs, we think there are two separate issues with streaming rates. First and most important services need to exercise pricing power to increase the revenue pie or stop asking artists and songwriters to fund and invest in their growth strategy without getting stock or upside. Second, the method of allocating streaming royalties could change so that you don’t hear fans saying “Sick of my money funding crap.” Chris Castle’s “Ethical Pool” approach in the influential post “Arithmetic on the Internet” is an interesting interim step that allows both artists and fans to opt in to an allocation based on usage not market share. If that’s not fixed, it’s just rearranging the deck chairs and artist need to be careful they’re not being used by services.]
As MBW reported Friday (January 24), a group of managers and lawyers representing some of Germany’s biggest artists have written a joint letter to the leaders of the four largest music rights companies in the market – Universal, Sony, Warner and BMG.
The agenda of the letter, undersigned by representatives of 14 artists, “becomes clear very quickly”, according to the Frankfurter Allgemeine Zeitung newspaper (F.A.Z), which published a more detailed story on the matter today (January 26) on the front page of its business section. Translated, F.A.Z says that the artist reps are demanding “more money from the booming business [created by] music streaming services such as Spotify and Apple Music”.
What’s also clear from the letter, according to F.A.Z: unlike prior artist protests against streaming, the letter does not direct its ire towards digital platforms, but instead “attacks record companies” and is “of the opinion that [the majors] are taking too much of the streaming millions”.
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