As YouTube's been getting some negative attention following threats to block indie labels who refuse to join its new paid streaming service, the full proposed contract with independents has surfaced online.
The 32-page document contains several concerning clauses, the most troublesome one being the ability of major labels to influence the rate of royalties paid to independents.
"To the extent that any major label agrees to any rates for the Google Services that are lower than the rates set forth in Exhibits C or D, including with respect to bundling, Google will have the right to reduce Provider’s analogous rates accordingly, following thirty (30) days written notice (via email will be sufficient) to Provider," the contract reads.
What indie labels are worried about the most is the potential for major labels to accept lower royalty rates for streams of songs in exchange for advances, or upfront payments. The clause suggests that independents could be forced to lower per-stream rates without getting the advances.
As the Guardian reports, another debate-provoking clause concerns "Catalogue Commitment and Monetization."
"It is understood that as of the Effective Date and throughout the Term, Provider's entire catalogue of Provider Sound Recordings and Provider Music Videos (including Provider Music Videos delivered via a third party) will be available for the Premium and Free Services for use in connection with each type of Relevant Content, (excluding AudioSwap Recordings, which will be at Provider's option) and set to a default policy of Monetize for both the Premium and Free Services, except as otherwise set forth in this agreement."
Basically, YouTube wants labels to make their entire catalogues available for streaming on both its premium and free services, setting them all to feature ads in and around them. For artists who want to withhold their music from YouTube, this is definitely a problematic point.
As the same source indicates, the contract sent to labels was a non-negotiable one, offering no option to push back against any of the demands.
In conclusion, YouTube is claiming that labels representing 95% of the recorded music industry have signed up to its service, which is about to begin internal testing later this year and soon follow up with an official launch.
Read the full contract over on Digital Music News.