Industry out of harmony with YouTube on copyrighted music tracking

On-demand site says its Content ID service matches audio files at 99.7% precision rate

The music industry is locked in an epic battle with YouTube, the most popular on-demand service, over the declining royalty rates the site pays per stream as it grows, and the difficulty in detecting copyrighted material from the mass of videos uploaded on the site.

The site voluntarily offers record labels a system to automatically block, monetise or mute their music on the site, matching audio files with 99.7 per cent precision, the service says, and a chance for labels to cash in on user-uploaded content instead of merely resorting to sending takedown notices.

But many music rights holders say the YouTube system isn’t foolproof and requires them to conduct a laborious, manual search daily to track content and collect royalties. They worry that YouTube gains an unfair advantage with the lower rates it pays for music over other on-demand streaming services such as Spotify and Apple Music, which pay far more per play but together have relatively fewer paying subscribers at 68 million, according to the International Federation of the Phonographic Industry’s latest report.

The music industry believes its future lies with these streaming services rather than YouTube, which they fret is conditioning fans to not pay for on-demand tunes.

But YouTube, a unit of Alphabet Inc, with its more than one billion users, packs clout and reach that the industry can’t ignore. YouTube says it has paid about $3 billion to music companies since it launched a decade ago, and today half of its payout comes from user-generated content identified by its system called Content ID.

Although the Alphabet unit pays out more overall each year, it now pays an average of eight one-hundredths of a penny ($0.0008) per play, and less than six one-hundredths ($0.0006) of a penny for user-generated content, down roughly 20 per cent from a year ago, people familiar with the matter said.

The free tiers from SoundCloud and Spotify, by contrast, pay at rates up to six times the rate YouTube offers for user-uploaded videos, one rights holder said. Another said it gets an average of 35 per cent more per play ($0.0011) from these free services than it does from YouTube videos. Paid subscription services pay even more per play, according to rights holders.

At the core of the dispute is the Content ID system that YouTube built nine years ago in an attempt to turn videos uploaded by users into a business opportunity for copyright owners, while boosting its own advertising revenues. YouTube says Content ID works nearly perfectly to help record labels protect their music and make money from it, and keeps getting smarter.

But many in the music industry say the system isn’t automatically identifying many of their recordings when users have altered or combined them — or occasionally for no apparent reason at all.

Furthermore, labels charge that Content ID doesn’t scan the YouTube channels managed by major TV networks and smaller networks such as Fullscreen and AwesomenessTV, many of which feature amateurs covering popular songs. Some label executives say the system only detects about 50 per cent of their music, forcing them to search manually for user-uploaded videos that slip through the cracks. On average, the music industry submits 2,000 claims a day on manually discovered videos, YouTube said.

Sony Corp’s Sony Music Entertainment said that since December 2012, manual searches have led it to claim 1.5 million infringing copies of its recordings on YouTube that weren’t identified by Content ID. Had it not discovered these, Sony said it would have lost $7.7 million in revenue.

YouTube can create a system that could block more potential copyright infringement; it is “no longer a technology problem,” said Vance Ikezoye, the co-founder of an audio filtering system called Audible Magic, which YouTube used as a contractor until 2009. A YouTube spokeswoman said the system is already “99.7 per cent precise for recordings on file.”

Harris Cohen, YouTube’s senior product manager of Content ID, said that its system has to “strike a balance” between the interests of content owners and users, who generate most of its advertising revenue and who may be using the copyrighted works fairly in their videos—for instance, as incidental background music or in some other creative context.

“There’s some level of work and involvement that is really required for that balance,” Cohen said.

Before Content ID, record labels couldn’t make any money from user-uploaded videos on YouTube featuring their recordings—they could only send “takedown notices” to YouTube to have such videos removed.

YouTube says it spent $60 million to build its filtering mechanism, and says it has improved over time. Most of the copyright claims made by Content ID’s 8,000 users are a result of this automated process, but 0.5 per cent of the claims are made on videos that the system didn’t catch. Fewer than 1 per cent of the claims submitted through Content ID are disputed by the uploaders, YouTube said. Even in those cases labels can claim the video again to remove it, the company said.

Also joining the fight have been music executives such as super manager Irving Azoff and artists from Taylor Swift to U2, asking Congress to change the law that protects sites such as YouTube from liability when they host music uploaded by users who haven’t obtained permission.

Steve Cooper, the chief executive of Access Industries’ Warner Music Group, said on a May earnings call that “it is imperative that we ensure a fairer correlation between the massive consumption of music via services built around user-uploaded content and the value generated for artists, songwriters and rights holders.”
Source: The Wall Street Journal