Why Indie Musicians Get Screwed By Streaming Services Like YouTube's
YouTube is the latest in a long line of platforms accused of treating indie labels like second-class citizens. But will that be the video giant's downfall?
Late last month, an international association of independent record labels made headlines when it went public with complaints against YouTube, which is preparing to launch a long-awaited paid subscription feature for music.
The indies alleged that YouTube, and its owner Google, were attempting to strong-arm them into unfavorable licensing deals. Unless the labels — including name-brand indies like XL Recordings (Adele, Vampire Weekend), Domino (Arctic Monkeys), and Merge (Arcade Fire) — agreed to the terms of the new service, Google was threatening to disable their ability to make money on regular, ad-supported YouTube. That would be a significant blow to the labels, who would lose the world's most popular destination for streaming music as a potential revenue stream.
YouTube's plans are controversial, but they don't involve banning any indies outright.
For indies, getting the short end of the stick with streaming is sadly nothing new.
Even though major label artists aren't necessarily worth more than independent ones.
Majors may dominate music sales, but streaming is a different ballgame. There's no evidence to suggest that major label artists perform better on average on streaming services than independent ones do. Nielsen doesn't track streaming counts by label, and the services themselves don't publicize marketshare data. But Caldas said independents' share of the total music pie is much larger in streaming than it is in retail and download sales. Last year, Merlin collected $89 million in revenue for indie labels from streaming alone (excluding YouTube), and this year it expects that number to reach $160–$170 million.
"There's no more retail space where you have to walk past the Katy Perry display to get to the punk rock," said Caldas. "In terms of access, in terms of the charts, even in terms of the amount of Grammy awards they're winning, independents are not at the periphery any more."
Thankfully, not all streaming services treat indies badly.
Many of the most successful streaming platforms, including Spotify, Rdio, and Beats Music, have approached independent labels with terms that are equitable with the majors. They argue that artists like The War on Drugs and Danny Brown are just as important to a quality music repertoire as Rihanna and Justin Bieber.
"It seems clear that YouTube is putting the screws to the indies, and from our perspective what they're doing is wrong," said Sachin Doshi, vice president of content and distribution at Spotify. "We're proud of the fact that we treat indies on par with the majors ... There's no substantial difference in the economics of our payouts from one artist or label to another."
Joseph Armenia, head of music marketing at Rdio, said his company has taken a similar stance.
"We have the same agreements with everyone, whether it's an indie label with one album or a major label that has 5,000 new releases a week," said Armenia. "Everyone is treated the same and brought in the door the same way."
And although the playing field isn't level, there's reason to be optimistic.
In some ways, the war over streaming revenue mirrors the same battle indies have been waging with majors since time immemorial. Just as the majors used their consolidated power, money, and influence to dominate brick-and-mortar retail and terrestrial radio in generations past, they're making a concerted effort to tip the streaming scales in their favor. Some streaming services, meanwhile, have taken a myopic view of what will be valuable to their customers over the long run.
So far, the streaming services that have been the most widely adopted and long-lasting are the ones that have treated all copyright owners fairly. And until better data is available on who is streaming what and how often, any service that plays favorites based on an old paradigm is gambling with its own life. For once, the great equalizer here may just be the free market.
"If you look at the services that are really making an impact, they haven't pushed independents off to the side of the business," said Caldas. "They're putting independent artists right next to any other type of artist and letting people listen to and discover them based on the merits. That's the future."