Harmony breaks out over YouTube music videos

Video-sharing Web site YouTube has agreed to a lump-sum payment of royalties.
Music videos will return to YouTube in the UK, the second-largest market for the U.S. Web site, after almost six months’ absence after its parent Google signed a new licensing deal with PRS for Music, the songwriters’ and publishers’ association.

The rapprochement comes at a time when the UK government is clamping down on online piracy. YouTube is looking to improve relations with rights holders, as it faces increasing competition from sites such as BBC iPlayer, Hulu and Microsoft’s MSN Video Player, and attract more labels to Vevo, its new online music video service in the US. Google blocked music videos from YouTube in the UK in March and later in Germany after claiming publishers’ royalty demands for a new licence were “simply prohibitive” and would lead to the loss of “significant amounts of money”. PRS has agreed to accept a lump-sum payment of royalties to cover music in any form on YouTube — from polished music promos and TV shows to X Factor clips and user-generated content — until June 30 2012. YouTube and PRS would not disclose the size of the payment. By taking a lump sum, which it then divides between its members, PRS is treating YouTube more like a broadcaster such as BBC than an online music service such as Spotify or Last.fm.

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Google said it was a “win-win” situation for YouTube users and the music industry. Music industry observers suggested that the deal represented a victory for Google, even though it was likely paying more to PRS than under the previous deal, negotiated in 2007. “For PRS to even agree to anything that is not tied to actual usage is quite a step for them to take,” said Paul Brindley, chief executive of Music Ally, a consultancy. Mark Mulligan, music analyst at Forrester Research, said it was in both parties’ interests to reach a deal. “A lot of the momentum in online video has shifted away from YouTube,” he said.

“Music is fundamentally important to YouTube, more so than at any point in the past.” Patrick Walker, YouTube’s director of video partnerships, said “it may take some more time” to reach a resolution in Germany, where it faces a similar impasse over royalties.