YouTube's New Paid Streaming Music Service Rankles Some Indie Labels

Online video giant confirms new service, but some accuse them of strongarming labels to sign on

Kiyoshi Ota/Bloomberg via Getty Images
June 17, 2014 3:48 PM ET

The battle between YouTube and various independent record labels, including those representing Adele and Arctic Monkeys, will intensify over the next few days with an alleged "mass cull" of music videos from YouTube's main website, according to the Financial Times.

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On Tuesday, YouTube confirmed longstanding rumors that it will launch its own paid streaming music service, partnering up with "hundreds of major and independent labels." But several record labels have been fighting back against what they perceive as draconian contracts YouTube is pushing for the service, and they are accusing the Google-owned online video giant of strongarming independent companies into signing on.

Alison Wenham, chief executive of the Worldwide Independent Network, called YouTube's tactics "bullying"; at a press conference last week, singer-songwriter Billy Bragg added, "I don't know why they've opened this hornet's nest right now, apart from corporate hubris. I don’t think they realize what a stupid thing they've done."

WIN reps have told reporters that YouTube's proposed contracts to independent record labels are non-negotiable, with less favorable terms than those of competitors such as Spotify and Rdio. Wenham told The Guardian: "We have been hearing from many companies across the world who are expressing fear, displeasure, outrage and confusion."

But YouTube reps deny the charge of a "mass cull," suggesting the indie-label network is making these accusations as a negotiating tactic. YouTube has signed up 95 percent of all labels for the new service, and will block content from the unsigned 5 percent, in certain countries, as part of predetermined contract agreements. A company statement said the new service will "bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year," adding, "We are excited that hundreds of major and independent labels are already partnering with us.”

YouTube has been hinting at launching a streaming music service, which will compete with Spotify, Beats Music, Deezer and others, for nearly a year. Sources close to the Google-owned company say it's about to undergo internal testing and could be out within the next few months. As download sales decline, and subscriptions to streaming services rise, many have predicted streaming will take over the music business for years to come.

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