YouTube's Controversial New Contract for Indie Labels Leaks Online

Most controversial clause concerning the ability of major labels to influence royalties of independents, full document inside.

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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.

24 comments sorted by best / new / date

    SkilletFan77
    Well of course they've gotten all those labels to sign off on this, the entire music business as far as labels and recording contracts go is tanking incredibly quickly. The labels want to get rid of the indie releases, because then there'd be a need for them again.
    Avuich9
    If it aint broke, don't fix it. So, why are they fixing Youtube? We just got over that weird Google+ shit and now this?! Everyones out to make a profit and it sucks, its not even about the music anymore. Its what it can make.
    BlackLabel5150
    someone help me out with Indie labels. Is an Indie label simply a label that isn't as big as say Warner Bros. ?
    tric565
    and indie label is any label that isnt universal, warner or sony. Its surprising how much power those labels still hold considering how few artists they have these days. All the best bands really are on indie labels like century, nuclear blast, kobalt and all the other 100s of punk, metal, "indie", hip hop & electronic labels out there. All the majors have really are a bunch of old aging dinosaurs and music aimed at preteens.
    theotherguy7145
    There's no way they can justify sh*t like that to anyone other than the major labels. It's a step backwards for everyone who enjoys music. If everyone could somehow switch to using another site and boycott YouTube, even just for a month, then it'd make them rethink their policy, but I'm pretty sure YouTube is too popular now. There's now way anyone could organise something big enough to make them notice. Personally, I started using Grooveshark to listen to any music I don't own myself, only resorting back to YouTube if I really have to.
    Sewage Rat
    Indie labels and their artists suck so who cares, if they didn't then they'd have a suit instead of a guy in his basement Big > Small
    redisni
    There is no denying that some indie artists are pretentious and untalented, but why focus solely on them? There is also a huge amount of pure brilliance going below-the-radar. And let' not forget the fact that the Major Labels are in an advantageous position for stuffing crap down everyone's throat (or ears) as along as it means hard money for them.
    redisni
    There is no denying that some indie artists are pretentious and untalented, but why focus solely on them? There is also a huge amount of pure brilliance going below-the-radar. And let' not forget the fact that the Major Labels are in an advantageous position for stuffing crap down everyone's throat (or ears) as along as it means hard money for them.
    Artturi
    being pretentious and untalented is what a lot of major label acts are too, the difference between major/indie is often the indie lacking a pretty face or having a spine.
    danny.kopij
    Or there's the whole DIY mentality a lot of bands take because they want to make music without interference from bigger labels and want to bring the music directly to the fans.