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YouTube is blocking thousands of music videos to British users after failing to reach a new licensing agreement with the Performing Rights Society (PRS), which collects royalties for songwriters.
The move on Monday has angered the PRS, which says YouTube — bought by Google in 2006 — is "punishing British consumers and the songwriters whose interests we protect and represent."
Steve Porter, head of the PRS, said he is "outraged" and "shocked" by the move.
His group released a statement condemning YouTube's tactics:
"Google has told us they are taking this step because they wish 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. This action has been taken without any consultation with PRS … and in the middle of negotiations between the two parties."
Patrick Walker, the director of video partnerships at YouTube, said the action was "regrettable" but added the PRS is seeking much higher fees, which were "prohibitive."
YouTube pays a licence to the PRS, which allows the site to stream music videos from three major music labels and several independent ones.
"We feel so far apart that we have to remove content while we negotiate with the PRS," Walker said on BBC News.
He said the rates that the PRS was seeking would result in YouTube losing "significant amounts of money on every stream of video."
YouTube is the world's most popular video sharing website.
The dispute between YouTube and the Performing Rights Society for Music that prompted the website to remove music videos could spread to MySpace UK and other music sites, industry sources said.
MySpace UK and other sites are struggling to renegotiate their own licences with PRS, which pays royalties to artists.
One source close to the negotiations said that the launch of MySpace UK's comprehensive music service later this year could be thrown into jeopardy unless it secured an economically viable licence with PRS.
"A lot of service providers are negotiating and renewing licences with PRS right now, but the rates are widely known to be uneconomical," said the source. "Nobody could run an online business on those terms."
The streaming service Pandora was forced to cut off its service for UK users on 15 January after it failed to renegotiate its licence with PRS. Imeem, which reportedly received $15m in funding from Warner Music last year, and RealNetworks are also understood to be renegotiating.
Meanwhile, YouTube and PRS are due to meet in London this afternoon and both say they are determined to resolve the deadlock.
PRS is understood to be basing its royalty claims on the results of the 2007 UK Copyright Tribunal, but the source said the rates PRS were demanding were so high that a free-to-view, advertising-based service would not be able to charge advertisers enough to cover the royalty payment on each video.
YouTube, which started to remove videos last night, repeated its claim that the rates are not sustainable except for sites that charge subscription access.
"However, we want to share the revenue generated from music videos on YouTube with the music industry," said a spokesman. "But at the rate set by the Copyright Tribunal - which is the rate PRS is seeking - YouTube would be losing money with each stream.
"It's simply unsustainable for our business."
A PRS spokeswoman said the ultimate aim of the talks were to come to an agreement, while YouTube said withdrawing videos from UK users was "not a breakdown in talks, but something that had to happen for talks to continue".
As a follow up to a story I posted here yesterday.
The U.S. recording industry is shifting away from suing file sharers and toward working out deals with internet service providers that could see downloaders have their access cut off, but the issue in Canada is still muddy because of a lack of clear copyright law.
The Recording Industry Association of America (or RIAA) on Friday said it was changing its approach to one it hopes will be more effective in persuading people to stop downloading music illegally.
More than 35,000 Americans have been sued since 2003, but the percentage of internet users who pirate music has stayed relatively steady at around 20 per cent, according to the Wall Street Journal.
Under the new approach, the RIAA will send an e-mail to an ISP when it believes one of the service provider's customers is downloading music illegally. Depending on the deal set up with the service provider, customers will receive warnings, possibly followed by a slow-down in their connection speed and ultimately a cancellation of their access (If you think your connection is slow now...just keep downloading, you'll see what slow is!) .
The RIAA said it has agreements in principle with some U.S. ISPs, but it didn't name them. Service providers have in the past been reluctant to act as copyright police, but some are becoming more co-operative with the entertainment industry as they seek to sign more deals for content with those same companies.
The move would follow similar developments in other countries including France and Britain, where ISPs are working with the entertainment industry to curtail illegal downloading.
Canadian ISPs have so far successfully lobbied the federal government against forcing them to intervene in downloading. The government's controversial Bill C-61 copyright reform legislation, introduced in the summer, contained a "safe harbour" provision that would have let ISPs off the hook for what their customers downloaded. Bill C-61, however, died when the fall election was called.
Lawsuits against music downloaders have not materialized in Canada to the same level as in the United States. The Canadian Recording Industry Association in 2004 sued 29 unnamed alleged file-sharers but the case was defeated when the Federal Court of Canada ruled that making digital music files available to others for download did not constitute copyright infringement.
Some lawyers and internet law experts also argue that a private copying tax on blank media is intended to compensate artists for revenue lost to file-sharing.
The Canadian Recording Industry Association (CRIA) , however, says the levy was never intended to legalize file-sharing. CRIA president Graham Henderson said it is not OK for a person to walk into a store, physically steal a CD, make copies of it and then have those copies considered legal. File-sharing of digital copies is the same thing, he asserted.
"[The levy] is one of the muddiest of the muddy waterers. (Is waterers a word?) I don't see it as having a role in legalizing it at all, but it certainly is one of the many excuses floated for why it's OK to do this in Canada," Henderson said. "You can't take something in an unauthorized way, copy it and then that copy is somehow legal."
University of Ottawa internet law professor Michael Geist said the analogy is irrelevant because the courts have been clear that the original source of the copy doesn't matter.
"It's certainly an arguable case that some of the personal non-commercial downloading that takes place falls within the ambit of the levy," he said.
Henderson said the CRIA has had a policy of not suing downloaders since he took the group's reins four years ago, despite people such as Barenaked Ladies frontman Steven Page warning that it was considering doing so. The CRIA has instead focused on getting copyright law straightened out so that it would be clear what people could and couldn't do with their music, he said.
Geist said the industry group has avoided lawsuits because of the negative publicity the 2004 case attracted. He also said that moves to involve ISPs as copyright cops in several countries have been hugely controversial and could backfire on both the industry as well as the service providers.
"It's viewed by many as a draconian step and we've seen push back against it in many countries," he said. "The ISPs that do that risk a serious backlash from their customers."
Henderson applauded the RIAA's move toward negotiating with ISPs and would like to do the same in Canada, but said the copyright situation needs to be sorted out first.
"Then we could give Canadians a fair chance to obey the law because, as I've said many, many times, I believe Canadians are fundamentally law abiding," he said. "The problem in Canada is we don't have laws to abide by. People are confused."
The Conservatives promised to reintroduce copyright reform legislation as part of their election platform, but those plans were put on hold with the eruption of parliamentary turmoil in November.
Although the CRIA praised Bill C-61 for its tough stance against file-sharing, the legislation was widely opposed by numerous other industry groups as being too heavily skewed toward copyright owners.
Geist said the only way the music industry can combat file-sharing is to provide a compelling legal alternative.
"The industry chose to sue rather than innovate," he said. "They're starting to come around, but it's pretty late in the game."
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