YouTube Re-Negotiating With Indie Record Labels Following Outcry (Report)

Indies were rankled most by what appeared to be an ultimatum, with YouTube telling labels it would remove advertisements on their music videos if they refused the contract's terms.

YouTube has softened its posture in negotiations on a new streaming music service with indie label trade bodies following an uproar in the past weeks over several provisions in the proposed contract, according to a report from the Financial Times.

A week and a half ago, indie trade group IMPALA filed a formal complaint with the European Commission against YouTube over the disagreement, saying it was engaging in anticompetitive behavior. Now, according to a source contacted by the Financial Times, YouTube is "back-flipping and backtracking."

Indies were rankled most by what appeared to be an ultimatum by YouTube, with the company telling labels that it would remove advertisements on their music videos, the service's principal revenue generator, if they refused the contract's terms, cutting them off from a stream that generates hundreds of millions of dollars for labels each year.

In an interview with Billboard earlier in June, president of the American Association of Independent Music Rich Bengloff said that “We are treated equitably and fairly by Rdio, Spotify, Rhapsody and about 20 other services, but obviously not YouTube."

Independent labels and trade bodies were also upset by terms that appear to favor major labels, especially a "most-favored nation" clause that would enable YouTube to lower its rate of pay to indies if major labels agreed to a lower rate as well. Additionally, the service has a lower overall rate of payment, 65.5 percent, a drop from the 70 percent typical of streaming services like Spotify and Rdio.

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