RIAA hits back at Lyor Cohen’s “safe harbours are a distraction” blog post

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The Recording Industry Association Of America took to the internets on Friday to bounce back some arguments at YouTube’s music chief – your main man Lyor Cohen – after he tried to paint a rosy picture of the role the Google-owned video platform is playing in the digital future of the music business.

YouTube, of course, has been the music industry’s enemy number one for sometime now, with the copyright safe harbour the video platform exploits topping the piracy gripe list of record companies and music publishers, ahead of actual music piracy.

As much previously discussed, the music industry argues that YouTube exploits the safe harbour to force music rights owners into much more preferential deals than those enjoyed by the likes of Spotify and Apple Music. Even though, as a provider of free music streams, YouTube arguably competes head on with the specialist music streaming platforms.

To that end the music industry wants safe harbour rules rewritten, so services like YouTube no longer enjoy protection. And while that’s not going to happen Stateside anytime soon, despite a specific US Copyright Office review of the safe harbour, in Europe copyright law is being revised with digital matters in mind and the music industry hopes to get workable safe harbour reform into the new European Copyright Directive.

But the whole safe harbour hoo haa is a big fat distraction, Cohen wrote in his previously reported blog post last week. What the music business should really be focusing on is the money it could earn from the growth of the YouTube Red subscription service, the potential to share in ever increasing amounts of YouTube advertising money, and all the new marketing tools Cohen’s team are working on providing to artists and labels.

It seemed unlikely that the blog-tastic musings of record industry veteran Cohen were likely to do much to placate the YouTube-haters amongst his former colleagues, and the RIAA confirmed that was the case by return mail.

“We are pleased that Lyor Cohen says he is making it his mission to direct some of YouTube’s revenues back to the music creators who drive its success”, the trade group’s boss man Cary Sherman wrote on Friday. “His optimism is encouraging. But to be honest, we’ve heard pretty much the same claims and arguments from YouTube before. So while Lyor’s heart may be in the right place, the numbers and YouTube’s actions tell a different story”.

The problem? Sherman charges that: “Google’s YouTube is the world’s biggest on-demand music service, with more than 1.5 billion logged-in monthly users. But it exploits a ‘safe harbour’ in the law that was never intended for it, to avoid paying music creators fairly. This not only hurts musicians, it also jeopardises music’s fragile recovery and gives YouTube an unfair competitive advantage that harms the digital marketplace and innovation”.

Expanding on his claim that the copyright safe harbour was never intended for services like YouTube, Sherman then uses one of Cohen’s own arguments against him. The YouTube music chief bragged about how his platform’s users often found music to listen to via the recommendations the service provides, proof of the role the Google site plays in music discovery. But that’s also proof, Sherman reckons, that YouTube is a far way from the kind of passive intermediary internet service that the safe harbour was designed to benefit.

Writes Sherman: “The safe harbour was intended to protect passive internet platforms with no knowledge of what its users are doing, not active music distributors like YouTube. As Lyor acknowledges in his blog, ‘the majority of music…is coming from recommendations, rather than people searching for what they want to listen to'”.

The RIAA boss then disputes Cohen’s figures. “About 400 digital services have been licensed around the world, many with ad-supported features”, he says, responding to Cohen’s claims about YouTube’s payout on free streams. “Comparatively, YouTube pays music creators far less than those services on both a per-stream and per-user basis, and nowhere near the $3 per thousand streams in the US that Lyor claims”.

He goes on: “Last year’s actual payout per 1000 streams was closer to half that amount, according to industry data and Nielsen and BuzzAngle estimates, and seven times less than Spotify, which also is both an ad-supported and subscription service”.

Noting Cohen’s argument that the averaging out of income across territories can skew the figures somewhat, so that they look less impressive, Sherman continues: “Lyor points to ‘developing markets’ outside the US to explain why YouTube isn’t paying enough [over all]. But YouTube’s monetisation in developed countries, such as some of the biggest markets in Europe, is nothing to brag about”.

Cohen added that confusion over what rates are actually being paid by different digital services in different markets was down to the general lack of transparency in the streaming market. That excuse – aimed at artists more than labels – capitalises on what is something of an Achilles heel for the secretive major record companies that the RIAA represents: ie their continued unwillingness to let artists and managers see the inner workings of the streaming business so to better explain the royalties they receive.

But it’s Google that needs to be more transparent, Sherman reckons. “YouTube likes to talk a good game, but it won’t even make public its subscriber figures”, he argues. “And it continues to underreport the number of music streams played on its service, let alone substantiate any of its many different claims about payments to music creators. In fact, every time they’re challenged on this point, Google and YouTube simply change their claims yet again”.

So, to conclude, Cohen – brought in by Google to try and build bridges to the many YouTube-dissers and safe harbour reformers in the music industry – still has plenty of bridge construction work ahead of him

Sherman adds: “It’s long past time that the safe harbours – enacted 20 years ago, in the days of dial-up internet, and before it was ever imagined that users could upload 400 hours of video to YouTube every minute – must be clarified to apply to passive and not active intermediaries”.

“To be clear”, he goes on, “we believe safe harbours should be preserved – and Google/YouTube claims that we’re trying to eliminate them is nothing but a red herring. But if safe harbours are to drive innovation and fair competition in today’s digital environment, they must be applied as originally intended, not as they are exploited by YouTube for its own competitive advantage”.