Following a long-held month-to-month contract deal with YouTube, Warner Music Group has become the first major to ink a new deal with the streaming giant.

While it’s still short-term, the terms didn’t fall too much in favour of the smallest major.

In a leaked memo to staff, WMG CEO Steve Cooper admitted he didn’t get what he wanted from the deal.

Using phrases like “tough negotiations”, “very difficult circumstances” and “there can be no free-market”, Cooper said it was the best deal available. This is due to the current thorn in the music industry’s side: the protections, or “safe harbours”, that YouTube and the like receive under the Digital Millennium Copyright Act (DMCA).

But if the deal was so bad, why wouldn’t Warner simply refuse to license its catalogue to YouTube? As Cooper points out in his memo, YouTube is a user-generated content service where uploads feature Warner’s music; this means the label’s catalogue would appear on it regardless. A low industry payout is better than no payout at all.

Cooper also said the new deals for its publishing and recorded music sectors, are “shorter than usual”. This could mean the label is optimistic about the upheaval overseas in response to YouTube’s use of safe harbours. Many global policy makers, including those in Europe, have begun working towards legislation.

There is hope. One person who would have played a hand in the deal is YouTube’s brand new Global Head Of Music, Lyor Cohen; aka Warner’s former chairman/CEO of recorded music until 2012. Prior to that, he ran UMG’s consolidated Island Def Jam Music Group.

Following the announcement of the deal, YouTube released a statement:

“After months of negotiations, we are pleased to say we’ve renewed our deal with Warner Music Group, Warner/Chappell and PEDL (Pan European Digital Licensing).

This new deal continues to capitalize on the growth in advertising revenue we’ve paid to the music industry – over a $1b paid out between November 2015 and December 2016 – and is an important step to enabling the international expansion of our subscription service, YouTube Red.”

Read the full memo from WMG CEO Steve Cooper below:

I wanted to let you all know that, following months of tough negotiations, we’ve extended our deals with YouTube, separately for music publishing and recorded music.

On the publishing side, Warner/Chappell tirelessly championed songwriters’ rights, and equally, our recorded music team was relentless on behalf of our artists and our music. We secured the best possible deals under very difficult circumstances. Our new deals are also shorter than usual, giving us more options in the future.

Nevertheless, our fight to further improve compensation and control for our songwriters and artists continues to be hindered by the leverage that ‘safe harbor’ laws provide YouTube and other user-uploaded services. There’s no getting around the fact that, even if YouTube doesn’t have licenses, our music will still be available but not monetized at all. Under those circumstances, there can be no free-market ‘willing buyer, willing seller’ negotiation.

YouTube has a bigger audience than any other streaming service, which presents huge opportunities for the creative community, and we’re always hopeful about the future. But our experiences during these negotiations were proof positive of the acute need to clarify ‘safe harbor’ provisions under US and EU copyright legislation. That’s the only way to conclusively close the gap between the revenue YouTube generates and what songwriters, artists, publishers and labels make in return.

Our sustained investment in new music and the pace with which we embrace emerging technologies, is resulting in some promising growth. However, ‘safe harbor’ laws that don’t protect artists, songwriters and rights-holders remain the weak link in the music ecosystem. We’re now calling for change more loudly than ever.

In the meantime, we’re all focused on doing truly original, imaginative and exciting work across all platforms, in order to bring our artists and songwriters the biggest opportunities, both creative and commercial. It’s already been an incredible year, and there’s an outstanding array of new music still to come.


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