Last week, YouTube put the fear of god into indie labels by stating that they might block smaller labels’ videos and music from appearing on their streaming music service and YouTube proper if they didn’t sign on to and agree to their terms of service. While the terms and what was at stake were somewhat vague, they aren’t any more. Digital Music News has leaked the whole 32-page contract with independent labels. While some of it is standard boilerplate contract talk, there are a few disconcerting clauses. As Ultimate Guitar notes, one paragraph states that major labels can influence the rate of royalties paid to independents:
“To the extent that any major label agrees to any rates for the Google Services that are lower than the rates set forth in Exhibits C or D, including with respect to bundling, Google will have the right to reduce Provider’s analogous rates accordingly, following thirty (30) days written notice (via email will be sufficient) to Provider,” the contract reads.
This means that major labels can potentially agree on lower royalty rates for streams in exchange for advances. That clause suggests indies could be forced to lower their rates without getting the advances. Another clause that The Guardian found troubling was the “Catalogue Commitment and Monetization” clause, essentially stating that labels’ entire catalogs would be made available to stream on both their free and premium sites, both video and audio, with ads shown in and around them. Given that there are artists that are still refusing to stream their music on Spotify, there’s bound to be some pushback from bands and artists that wouldn’t want their music surrounded by ads.
Independent music trade organization WIN (Worldwide Independent Network) claims that YouTube has tried to forced its members to sign the contract, and that the contract is non-negotiable. If you speak legalese or want to read the entire contract to see some of what an independent label has to put up with, you can read contract here. While there’s no date for when YouTube’s streaming service will launch, the fact that they’re sending contracts to labels suggests that it’s coming pretty soon.