Google's About to Ruin YouTube by Squeezing Indie Labels

It's official: Google is about to ruin YouTube. A company exec told the Financial Times it will start blocking videos from record labels that refuse to sign licensing deals for its forthcoming premium service, YouTube Music Pass. This is the dumbest thing Google could do, and it threatens the very heart of what has always made YouTube so special.

It's been nearly a decade since YouTube first flickered on in February 2005, and in the years since, the free video service has changed the internet forever by becoming the central destination for everything from funny cats, to protest footage, to movie trailers, and of course, music videos. YouTube is amazing precisely because it has been an easy way for content makers to share their latest creations. This is especially true for music.

YouTube is almost perfectly suited for sharing music videos that are basically the ideal short video packages that thrive on the service. Indeed, for the younger subset of listeners, YouTube is becoming the de facto way of listening to music.

More than just a way for artists to easily promote their latest singles, YouTube has become a legitimate source of income. Pre-roll advertising and services like Vevo help artists make money off the millions upon millions of plays on their songs. And YouTube's Content ID even helps artists make money off uploads that aren't their own, by placing buy links on videos submitted by users.

Though Google has pretty much always been a good shepherd of the original YouTube vision, it's been clear for a few years that the company planned to offer premium services in an effort to squeeze more revenue out of its market dominance. Why shouldn't it? It's a great service and if it can offer even more to people for a fee, that's totally fine.

Unfortunately, in an effort to build out the long-rumored YouTube Music Pass, Google's resorting to strong arm tactics that threaten to destroy YouTube. The Financial Times reports that Google has inked deals with the three major record label conglomerates (Sony, Warner, Universal), as will as a number of indies, accounting for 90 percent of the music industry.

The problem is Google's plans for the other 10 percent. The company's head of content Robert Kyncl told the FT that it plans to start blocking videos from indie labels that haven't signed licensing deals "in a matter of days." The FT says that these labels include XL Recordings and Domino Records, whose rosters include Adele, Animal Collective, Arctic Monkeys, and loads of other popular artists. In a statement to Gizmodo, Google confirmed the FT story as well as its intentions to launch a subscription-based service.

Some labels are refusing to sign up because they say they're getting a raw deal from Google. They say that while the major labels have negotiated lucrative contracts, Google is offering indies comparatively bad terms. It's their right to say they don't want to sign up if they don't like the deal Google is offering them. In response, Google is drawing a line in the sand: If your label won't sign on to Google's crappy licensing deal for a new streaming service, you can't host videos on YouTube at all.

Google's bully business tactic here is bad for everyone. Users won't be able to hear some music they want, artists in the 10 percent blocked won't be able to reach their fans.

But perhaps the worst consequence is that YouTube will cease to be home for the 10 percent. What's always been amazing about YouTube is that it's the place where stars like Psy and Justin Bieber—whether you appreciate their music or not—found massive audiences, and how hundreds of other stars maintain their profile and cultivate their fan base in the post-MTV age.

It's not clear how exactly Google plans to deal with the unsigned upstart who uploads a video an blows up, but the implication that underlies Google's threat is that doesn't want YouTube to be the place where artists blow up anymore at all. YouTube's power has always been its extraordinary openness; once Google starts to wall off the service to the creators, the YouTube we all fell in love with will be dead.

Update:

This post has been updated to reflect a statement from Google. The full statement has been posted below.

Beyond what's in the FT story, here's a statement from YouTube:

"Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry. We're adding subscription-based features for music on YouTube with this in mind — to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year. We are excited that hundreds of major and independent labels are already partnering with us."

Top art by Michael Hession