Google-owned music sharing service, YouTube has pulled the plug on all music videos from the UK after failing to reach a new payment agreement with the Performing Rights Society for Music (PRS), the trade body that collects music royalties on behalf of nearly 50,000 composers.
YouTube said today that PRS had put forward a new payment term after the expiry of its previous contract, which would make it frightfully expensive for the site and would make YouTube pay more than the revenue it makes from the ads next to each video.
YouTube also alleged that PRS refused to identify which artists and songs are covered by the licence, as YouTube required identifying and paying royalties to the rights holders for each song that is viewed.
It said that since copyrights in music is pretty complicated as there may be several different copyrights in a single music video, controlled by different organisations with different interests. The visual elements and the sound recording of a music video are typically owned by a record label, while the music and lyrics of the song being performed are owned separately by one or more music publishers.
Since there were two obstacles in these negotiations, one being prohibitive licensing fees and the other, lack of transparency, YouTube said that it was forced to block premium music videos of EMI, Universal, Warner and Sony BMG in the UK that have been supplied or claimed by record labels.
YouTube is still be working to create more ways to compensate musicians and other rights-holders on its site and in addition to various advertising options. It has recently introduced a click-to-buy feature that enables fans to purchase downloads of their favourite songs.
Many see this as Google's way of arm twisting the recording industry as YouTube is currently the world's most popular online video site. Since Google acquired YouTube for $1.65 billion in 2006, it has begun to put increased pressure on YouTube to generate more revenue and profits.
PRS in the meanwhile has denied all the claims made by YouTube and said that it is outraged on behalf of consumers and songwriters that Google has chosen to close down access to music videos on YouTube in the UK.
PRS said that in fact Google is taking this step because it wants to pay significantly less than at present to the writers of the music on which their service relies, despite the massive increase in YouTube viewing.
PRS also claims that the arbitrary action was taken by YouTube without any consultation with PRS for Music and in the middle of negotiations between the two parties. PRS for Music has not requested Google to do this and urges them to reconsider their decision as a matter of urgency.
Steve Porter CEO PRS for Music said in a statement, ''We were shocked and disappointed to receive a call late this afternoon informing us of Google's drastic action which we believe only punishes British consumers and the songwriters whose interests we protect and represent.''