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Metallica manager: YouTube is the devil

BBC News BBC News 18/04/2016 By Mark Savage

Radiohead guitarist Ed O'Brien says it is unclear where royalties from music streaming sites ends up © BBC Radiohead guitarist Ed O'Brien says it is unclear where royalties from music streaming sites ends up Peter Mensch, the manager of bands including Metallica, Red Hot Chili Peppers and Muse, says YouTube is killing the record industry.

"YouTube, they're the devil," he told a BBC Radio 4 documentary on the music business. "We don't get paid at all."

He said the site's business model, in which artists make money by placing ads around their music, was unsustainable.

"If someone doesn't do something about YouTube, we're screwed," he said. "It's over. Someone turn off the lights."

Mensch's arguments echo concerns raised in the annual report of the International Federation of the Phonographic Industry (IFPI), which was released last week.

It said there was widening "value gap" between the volume of music consumed on free, "user-upload" services - including YouTube, Daily Motion and Soundcloud - and the amount of revenue they generate for the industry.

An estimated 900 million consumers on these sites resulted in revenue of $634m (£447m) in 2015. By contrast the world's 68 million paying music subscribers generated about $2bn (£1.4bn).

"The market-distorting value gap must be resolved if music is to thrive in the long term," the report said, adding that it hoped to pursue a legislative solution.

The problem also has a "serious impact" on subscription services like Spotify and Apple Music, who struggle to attract paying customers, the report continued.

"It's hard to make people pay for what they've been getting for free," agreed Mensch. "That's consumer behaviour one-oh-one."

YouTube contests that it has "paid out over $3bn (£2.1bn) to the music industry," although it did not give a timeframe for these payments.

'Wild West'

Responding to Mensch's comments, YouTube CEO Robert Kynci suggested artists were not seeing YouTube payments because of the agreements they had with their record labels.

"It really depends on what is the flow of the money from us to you," he said.

"The artists who are signed up directly with YouTube are seeing great returns," he said. "Not everybody - but if you're generating a lot of viewership, you're making a lot of money."

He cited the example of hip-hop violinist Lindsey Stirling, who has 7.8 million subscribers to her YouTube channel, and made $6m from the service last year.

"Lindsey is set up directly with YouTube and she sees all of her consumption and how much money she's making and it's very clear. In other cases, maybe it's less so," said Kynci.

"There are middle-men - whether it's collection societies, publishers or labels - and what they do is they give advances and they want those recouped. So it's really hard when there's no transparency for the artist."

"The people who don't have visibility are generally the ones who tend to be less happy. If you don't have full visibility, you're somehow more susceptible to negative thinking."

The music industry rhetoric around YouTube is intensifying for several reasons. First and foremost, YouTube's licensing agreements with the three major record labels - Sony, Warner and Universal - are all said to be up for renegotiation this year.

The industry is also pushing for reform to the "safe harbour" laws which mean YouTube and other similar sites cannot be penalised when users upload copyrighted material - including full albums - to their services, provided they remove it on request.

Mensch and Kynci were on a new BBC Radio 4 documentary, The Business of Music, with Matt Everitt, which looks at how the internet brought the music industry to its knees at the turn of the millennium.

It also features Radiohead guitarist Ed O'Brien, who says the internet is still "the wild west" when it comes to music.

He said: "This is the thing that you hear from streaming services: 'We've paid out $2bn'. But it's very difficult to know what's happening with this money. Where is it? Is it the record companies?

"This is the problem, it all disappears into this opaque hole."


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