YouTube, music labels end standoff, move towards paid service

YouTube signed a new long-term agreement with the top two music labels, promising stronger policing of user uploads of copyrighted songs and paving the way for a new paid service after two years of tumultuous negotiations.

Universal Music Group said its deal with YouTube will give artists more flexibility and better pay. Sony Music Entertainment also signed a new agreement, according to people familiar with the matter. The Tokyo-based parent company declined to comment.

The accords establish royalty rates between YouTube and rights holders for professional music videos and user-uploaded clips, and pave the way for YouTube to introduce a new paid music service early next year. Warner Music Group, the third major label, signed a new deal with YouTube in May.

YouTube expects to convert some of the millions of people who listen to music for free on its video site into paying subscribers. That would help strengthen its relationship with the major label groups after years of tension over whether the Google-owned site was paying enough to copyright holders. 

Universal, owned by Vivendi, got control for the first time over what appears on ad-supported channels and persuaded YouTube to improve scanning for user uploads that include copyrighted content, a person familiar with the matter said, asking not to be identified discussing private information. Some songs and videos will only be available on the paid service, differentiating it from the free service, the person said.

YouTube is one of the most common ways people all over the world consume music, and one of the most important promotional organs for managers and record labels. Yet the site and its parent company Google, a unit of Alphabet Inc., have struggled to persuade consumers to pay for music. Paid services Spotify and Apple Music have spurred a recovery in the music business, converting listeners into monthly subscribers.