YouTube Multi-Channel Networks & the Great Music Money Debate

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There are a lot of analogies being floated around concerning the mainstreaming of YouTube and its content providers — from the death of the “Old West” to the rise of Big Business. Allow me to offer one more: the music business.

See, in the pre-Napster party days of the music industry, record labels did what they want. They controlled artists, they set pricing and they told radio stations what they could and could not play. And then, like the meteorite that preceded the mass extinction of the dinosaurs, Napster changed everything. The record labels are now forced to subsist on a much narrower operating diet than they were used to because their customer base ultimately revolted. And now that the music industry has been made to suffer, they want YouTube’s multi-channel networks to suffer as well.

YouTube, you see, recently had to settle with the record labels over unaffiliated users uploading copyrighted content to their site. But this agreement does not stretch to include the MCNs, such as Fullscreen and Maker, who have, for years, apparently been able to operate without paying those same fees. And it isn’t exactly a Goliath picking on David situation either — with Maker recently getting $36 million in venture capital, it is more like Goliath picking on … other Goliath.

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Brandon Martinez, the Co-Founder & CEO of INDMUSIC, a YouTube multi-channel network for unsigned and independent musicians and labels, addressed the issue diplomatically. “I would hope that other MCN’s are working to acquire necessary licenses for all of their content, both original and their Partners whom they are responsible for as well.  MCN’s also need to make efforts to educate themselves and their Partners on proper copyright etiquette.  If MCN’s are going to aggregate channel partners by the thousands, they need to take measures to ensure the system continues to work; otherwise, they can absolutely expect the music industry to seek reparations for the misconduct of MCN’s and their partners.”

INDMUSIC further stresses that the fundamental difference between them and several other MCNs, is that INDMUSIC offers a transparency between the artist and their network, as well as INDMUSIC’s assertion that they approach the issue from the aspect of the performers and musicians. They are the Good Guy Greg’s of the MCN world (my words, not theirs).

YouTuber and occasional NMR contributor Tay Zonday, himself signed to a MCN, succinctly addressed the grey area brought about by deciding who owes what to whom.

“The problem here is *transparency.* The gross MCN internet revenue is so opaque between YouTube ads, brand deals and merch sales that music copyright holders can’t precisely audit the revenue their songs are tied up with.

The *only* way for music copyright holders to be informed about the revenue their songs generate on YouTube is to claim (for ad revenue) every video that uses their song. YouTube has some tools to enable copyright holders to do this. Those tools need to be stronger and they need to be MCN-agnostic.

MCNs are a YouTube-revenue Guantanamo Bay insofar as they can take advantage of their own grey legal status. They take all copyright liability out of Google’s hands which Google loves, but then videos their talents upload are not always as easy for rights-holders to monetize.”

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Of course, the smarter channels might not have to “pay the piper.” Maker and Fullscreen’s partnerships with Universal Music allegedly allows their signed artists to use all of Universal’s music, duty free. Similar deals with other record labels could allow for MCNs to have built their brand partially on the backs of cover songs, parodies and “fair-use” claims, only to climb in bed with the very copyright owners they have maligned. Of course, there is certainly something to be said for the free publicity MCNs have generated for record labels with their use of copyrighted songs. I’ve found numerous songs to purchase through iTunes by first loving them in a well-made creator vid. It’s all a sticky web that is doubtlessly going to have a few more flies wrapped up in it before everything is sorted.

In short, this is the world of business at its finest.

For supplemental info, check out Matt Pincus’ comprehensive covering of this topic for Billboard.com, or NMR’s 9 Things You Should Know About Copyright And Fair Use on YouTube, as well as our coverage of Vimeo’s own troubles with the record labels.

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