As the European Commission returns from the August break, Joaquín Almunia will be getting back to work. Top of his agenda as the Vice President of the European Commission responsible for Competition Policy has got to be the Commission’s Statement of Objections against Google that seems to grow by the day. This week, we saw the latest abuse of Google’s monopoly power: Intimidating artists into silence by muzzling critical press coverage about Google’s lopsided deals. Deals on splits of advertising revenue that cannot be audited by anyone–including the advertisers themselves.
We have long encouraged Mr. Almunia to take a close look at YouTube, an often overlooked but extraordinarily significant vertical in the Google search monopoly. YouTube is a company that thrives on infringing or grey area material–Google’s Eric Schmidt reportedly paid a $1,000,000,000 premium for YouTube based on documents produced in the Viacom lawsuit. Why? I think it should be pretty clear that Google paid the premium to take YouTube off the market. That’s fine, that’s capitalism.
But what happened next is not fine. Google then proceeded to subsidize YouTube with monopoly profits from its other verticals. Google used its litigation muscle to intimidate artists and songwriters by using the “notice and shakedown” technique and disinformation campaign to make artists feel that there somehow was something wrong with them if they didn’t give YouTube what it wanted.
Google tried to pass off the YouTube Content ID system as some sort of gold standard, when in fact it is no different than Google’s other attempts at assembling artist databases and faux royalty systems (see Professor Geoffrey Nunberg’s excellent piece, “Google Book Search: A Disaster for Scholars” and Google and the Myth of Universal Knowledge by Jean-Noël Jeanneney, president of France’s Bibliothèque Nationale).
If you have ever heard of Content ID, recall that it is the technology that Google uses to identify recordings on the YouTube platform–especially for blocking purposes. Meaning that Google would have you believe that if you don’t want your work to be on YouTube all you have to do is give Google a copy of your recordings and they will block it. (This is called, crowdsourcing a database of sound recordings that Google will use for other purposes, but that’s another “Tale of the Mechancial Turks.”)
However, it turns out that this is not quite true according to the guest post at issue in Digital Music News by Emmanuel Zunz, founder and CEO of ONErpm.com, a digital distribution company focused on DIY and indie artists and labels. ONErpm also has a Multi-Channel Network (MCN) on YouTube specializing in music–MCNs are high traffic YouTube channels that are very much inside the YouTube power structure. Mr. Zunz tells us more about Content ID:
The other way to make money on YouTube is through Content ID, YouTube’s fingerprinting technology that identifies your music and/or videos that are partially or entirely used by other YouTube users on their channels. This special technology is NOT available to everyone, and is only awarded to PREMIUM partners that depending on their deal with YouTube have different benefits and tools available to them. In order to monetize those CONTENT ID videos on your behalf, YouTube automatically generates a CLAIM at which point the advertising revenue flows to you instead of the other channel.
Mr. Zunz revealed this fact as well as some other interesting details about YouTube’s income splits. This is all good information for artists to have and is not exactly going to bring down the company. But what happened next is what Mr. Almunia should focus on, because it is indicative of other behavior by Google that he has seen well documented in the competition proceedings against Google.
The day after Mr. Zunz’s post appeared on Digital Music News (yesterday), the website wrote “YouTube Demands the Removal of a Digital Music News Guest Post...”
YouTube is now threatening to completely sever its relationship with digital distributor ONErpm, thanks to some ‘over-sharing’ of information in a recent guest post on Digital Music News. According to ONErpm founder Emmanuel Zunz, YouTube is unhappy that certain payout details and percentages were disclosed, with a complete blacklisting being threatened.
In a story today, “YouTube Successfully Intimidates a DMN Guest Contributor…“, Digital Music News
Despite serious threats, YouTube has been unsuccessful at removing an earlier article on Digital Music News about confusing royalty payouts and specifics. But what they have been successful at is preventing the next one: a 4,000+ word, highly-detailed essay on YouTube best practices and royalties, from [Mr. Zunz’s ONErpm,] a company highly-specialized in YouTube distribution. [ONErpm] simply got spooked, and asked that we not print the piece for fear of having their MCN status revoked by YouTube.
What Mr. Almunia should investigate is exactly how often this kind of thing happens with YouTube–even with very large companies that one might think could defend themselves.
What YouTube’s suppliers and advertisers fear is doing something that would anger Google and cause them to be cut off from online videos–because Google effectively has a monopoly on video search. And Google uses that monopoly to control many aspects of online videos from deal terms to its public image.
Bear in mind that Google won’t do this to artists with big hits driving traffic to YouTube that Google then monetizes to its own benefit. But thanks to Google’s search monopoly driving traffic to pirate sites and selling keywords like “Lady GaGa torrents,” there are fewer artists in this hit category every year.
Protection from this kind of monopoly leverage over advertising, video distribution and promotion is exactly what citizens look to their government to accomplish.