Its been a while since we updated this blog. That is not because there is a lack of news in the music industry! Far from it! However it is simply because we have been pulled in different directions by the industry itself. At the moment there any tons of opportunities to make money and pursue new audiences in the music and sound sectors. Indeed the creative industry sector is expected to grow over the next 5 years, and that despite the global economic downturn. 

Does this mean the times are good for everyone or even that the money you can potentially make from your ‘art’ and skills is of a high volume? Well lets tackle those two questions.

Times are clearly not good for everyone in the creative sector. As we know large record labels are failing, indeed they have been for sometime. However the recession is accelerating the rate at which their old business model is dying out. This is due to a number of factos such as:

• People having less money on non essential purchases, such as music
• When they do want to buy music, they want it for less (same with films, see the crash in DVD prices!)
• Other industries which might have utilised music as part of their model, and hence are a customer of the music industry’s are trying to pay less, as they are making less. Ad funded websites for example.
• Recessions are time when people invest in new businesses with new models, and the record labels do not represent this sector of business.
• Some of the record label’s mother companies, which might have once absorbed their losses for strategic reasons are themselves losing money. Sony for example. Hence that puts more strain on any part of the overall business which is shrinking or failing, the music part for example. 

To bring those of you who have missed this news story uptodate:

YouTube have stopped allowing UK residents to see music videos from major labels. This is because they have not been able to agree the package paid to the PRS, which is the body that represents the songwriters in the industry (not the record labels). 

In many ways, what Youtube have done is ethical. Their previous deal expired and without agreement they shouldn’t make the content available. Additionally, without knowing what the final figure is they might be worried about exposing themselves to an unknown fee to be retrospectively applied to this period of time where no deal is in place.

However, its also quite possible that YouTube is simply posturing, and showing the PRS that songwriters represented by the ‘industry’ need YouTube far more than YouTube need them. In some ways YouTube would be right, whilst songwriters whos material is being used in ‘premium’ videos are being pulled, other ‘long tail’ artists, people who are probably not even members of the PRS, are still having their content made available.

The PRS is slowly changing the nature of its membership as its now offering free membership. They want as many people to join as possible as this would, in theory, allow them to leverage that user base when negotiating with the likes of YouTube far more succesfully. 

However, one has to wonder if eventually a cultural levy might have to be placed by government on organisations such as YouTube. A Corporate license fee as it were, which is collected centrally. It would then be left to organisations such as the PRS and PPL and labels directly to negotiate with the holders of that fund, what cut they should have. 

Something has to give, as the current situation is not great for songwriters. Music has a value, and even if times have changed and the end consumer no longer has to pay, we need those that leverage that value to appreciate this and commit to principles which enshrine fair payment. 

Some artists have asked for a share of the ad revenue derived from Youtube clips, and this is already on offer to those who own the videos (which is a separate form of ownership of the song). Thats not insane, but at present the technical infrastructure for that does not really exist on sites such as Youtube. On Itunes all music is placed with ISRC codes, which means you can trace the publisher/songwriter, copyright holders etc. With Youtube, at present, none of that data is transferred, so how can they pay directly to a songwriters? They cant. Thats why the PRS has to negotiate a lump sum type approach to YouTube and then work it out from there. However, Im sure a company the size of YouTube could put the infrastructure in!

However, this is not a one-off situation. Warners recently pulled their own content from YouTube over a similar issue. So what is the solution? It might simply be that YouTube is not the right platform for professional material. Its ideal for amateur works, or previews of commercial works. However, unless they launch a commercial channel section, a proper pay to view scenario, then content owners and those that represent content owners, will just have to steer clear of the website.

Mind you, YouTube have recently announced that they will soon allow people to download content, and charge for this privilege. Perhaps that might be the middle ground? The PRS and Warners would accept a lower payment for the streaming material, seeing it as a type of preview. Consequently a fairer form of payment is transferred when the content is downloaded by the user, just as it would be in the world of Itunes.

The PRS has a simple message which is that content is made and owned by people. Real People. Most of them earn less than £5000 a year (so they claim). Its not healthy for them to have it withheld from the consumers or to have it available but without real financial remuneration.

Perhaps the answer to these issues, is not to dance around numbers but to look at the actual system and platform on offer and work together to build something that offers value for all. The Youtube model was built without having to take these issues into account, and was essentially for amateur content. Now its been adopted by everyone, yet its own business model and delivery options are not compatible with the commercial production world’s needs and that, it would seem, is the core issue. We, the content creators love YouTube, but need it to work with it to  change how it offers content with a tiered range of options. 

Is anyone having this conversation?