DMCA Assists YouTube Evade Billions In Royalty Fees Every Year Says Research

YouTube-royalties

DMCA rules should be more strict against the likes of YouTube and Google.

We always knew DMCA was something evil didn’t we?

Perhaps not.

Regardless, DMCA offers provisions that enable internet streaming platforms to evade liability for copyright infringements.

As you can probably imagine, most of the copyright infringements occur because of the users of the internet platform.

Not the internet platform itself.

DMCA, of course, is not the culprit here.

It just acts as a safe harbor for internet platforms that have shown time and time again that they don’t care about anything else other than their stock price.

And you know what?

That’s not even the worst part.

The worst part is that these same DMCA provisions allow these same internet platforms to dodge paying for copyrighted content on the internet.

That’s what the critics say.

So what’s the real story?

Well, we’ll try our best to explain it so that everybody knows who’s doing what in the online world.

Let’s Start With Science

Not literally.

Of course, the earth is flat and no amount of evidence that PROVES otherwise is going to stop a tiny percent of the earth’s population in believing so.

What we’re referring to here is a study some researchers published a while back.

YouTube-exploits-dmca

If the study gets more media attention, YouTube might lose a lot of revenue to artists and creators.

The study was done in the US if that makes any difference to the final conclusion.

Nevertheless, the study’s aim was a simple one.

Researchers wanted to find out the exact value of the revenue portion that was lost because of some copyright infringements.

Therefore, it should not come as a surprise to anyone that the sums we’re talking about here are huge.

The study found that the revenue losses could potential be in the billions rather than millions.

And that’s just for youtube. For just one year.

There Is A Lot At Stake

Since this piece of news could become huge overnight, you would think that DMCA would do something about it sooner rather than later.

And maybe save the situation from boiling over a bit too soon.

The “safe harbor” DMCA provisions are not really news.

Industry insiders have long known that DMCA is not as strict as it claims to be.

Or rather wants to be.

It does go after pirates and piracy websites.

But doesn’t look like doing anything when it comes to YouTube.

We’ll discuss the reasons for that shortly.

Still don’t know what we’re talking about?

Well, the situation is pretty straightforward.

Some rightsholders groups feel that there are some provisions in DMCA which protect certain players in the industry.

Mainly, though, they believe that specific internet platforms which are used to upload videos and audio content abuse their DMCA-enabled immunity.

As a result, these platforms make a lot of money.

All from copyrighted pieces of content.

In other words, these internet platforms don’t have any licenses for the content they hold and make money off of.

Recently, Hollywood along with other big names in the music industry criticized Google for not doing more to stop piracy.

Now, they are starting to do the same with YouTube.

Not surprising, but expected.

At this time, it is only a war of words.

But how long can this bombardment of criticism on YouTube last?

YouTube Should Do More

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Currently, YouTube does not pay its fair share to artists like other streaming services do.

YouTube has an unimaginably massive audience.

And the company draws a great amount of revenue from that audience.

All of the commercial benefits, however, goes to YouTube.

That’s where the world’s leading record labels have an issue with YouTube.

YouTube allows people to infringe songs.

Of course, YouTube doesn’t officially do that.

But the users who use the site do.

And since YouTube isn’t involved (only its users are), the company can hide behind this fact.

Consequently, it doesn’t have to pay the huge sums of money for licensing fees.

But the likes of Apple and Spotify have to.

That’s where the problem comes from.

There needs to be some kind of fairness in the system.

What Does YouTube Say?

YouTube didn’t get this much audience by being naive about how to do business.

In other words, YouTube makes its defense by saying that it does what it possibly can to fight copyright infringement.

The company also says that it tries to take down copyrighted content as quickly as possible.

But only when asked to.

YouTube also invests heavily on systems such as Content ID.

Content ID systems enable YouTube creators to make money off copyrighted content.

Of course, that only happens when the content creators themselves choose to do so.

Along with that, YouTube pays a good bit of money to the labels themselves too.

To put it another way, the problem isn’t as bad as some say it is.

YouTube can probably get settle the issue with a slight change in current laws.

What happens in the meantime then?

Well, in the meantime, entities such as the entertainment industry are busy maligning YouTube and Google.

They call them freeloaders.

Freeloaders who make billions from copyrighted content that takes a lot of effort on part of the creators, to make.

What Are The Exact Numbers?

dmca-quick-against-pirates-not-against-youtube

DMCA has plenty of rulings for pirates. Not much for the likes of YouTube.

In these types of issues, no one really has the time neither the resources to actually count how much revenue is lost.

In other words, the losses are not generally quantified.

This is about to change now.

A new study in Washington from the Phoenix Center argues that it has done just that.

The study is aptly named “Safe Harbors and the Evolution of Music retailing.

For those who want to know, Michael Stern, a Ph.D. and T.Randolph Bear, another Ph.D., are the authors of this study.

Both suggest that the numbers behind this case are enormous, to say the least.

The paper starts off by saying that Music is considered a vital part of YouTube’s platform.

It is also a great source of advertising revenue.

Why?

Because it accounts for more than forty percent of YouTube’s views.

But even that fact firmly in place, YouTube does not pay the recording industry its dues.

How?

While YouTube does pay the deserving artists, it does so away below standard market rates.

Readers should know that the music content on YouTube isn’t made by amateurs.

The audio content on YouTube is really heavy duty.

Most of it is on-demand.

And content like that requires a lot of effort.

How does YouTube get away with it?

YouTube relies on the DMCA safe harbor provisions, says the paper.

The Study Reveals A Lot Of Information About YouTube And DMCA

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Does the DMCA protect YouTube by default?

The paper continues forward and cites figures recorded in the year 2016.

These figures are provided by the IFPI.

The study reveals that music services received about sixty-eight million subscriptions in 2016 globally.

All these subscriptions came under the control of regular licensing arrangements.

As a result, these 68 million subscriptions brought in revenues in the range of $2 billion for artists along with label companies.

While that $2 billion number may seem huge, and it is huge, artists and labels were only paid at $0.008 per purchase of their product/content.

Here comes the shocker though.

Ad-based online streaming services like YouTube had 900 million users in the year 2016.

These 900 million users generated in the range of $634 million in terms of revenue for these internet platforms.

But these internet platforms only paid the recording industry at a measly $0.001 per view/play.

The paper further noted that it was plainly a huge price difference for close substitutes.

After the simple introduction, the study goes into an ocean of figures and some theories which would only please the economists of this world.

The whole report, by the way, is around 20 pages.

So at least they pull a Thomas Piketty all over again.

The conclusion of the study too could only interest the RIAA rather than the average internet user.

Long story short, YouTube should pay creators more money.

To put it another way, YouTube has to hand out significantly more royalty checks per view to the artists/creators.

And it should do so without any sense of accomplishment or philanthropy.

Why?

Because the other rival subscription-based online services already do the same.

At least that’s what the study suggests to readers.

The Recording Industry Need a Bit Of Help

dmca-and-youtube-are-partners

Perhaps YouTube giving artists their proper share may revive the industry. Not that it would be a good thing though.

The study further adds that more rational royalty policies would significantly and positively affect the recording industry.

It then says that increase royalty check could also help the industry recover from the massively negative consequences of the Digital Age.

Perhaps, an increased amount of revenue could also help the industry with the outdated public policies that have affected the industry for years now.

One could just simulate the royal rate for Youtube and then change it to see the after effects.

YouTube is after all the largest supplier of digital music in the United States of America.

And the least it can do is to pay its creator more money so that they can continue to do what they love to do.

According to data collected in 2015, the study says, that if services like YouTube were to increase royalty rates, it would dramatically increase the overall revenues.

As far as figures are concerned, the study says that a reasonable royalty rate increase could increase revenues, in the US that is, from a region of $650 million to a region of more than $1 billion per year.

That is more than 50 percent increase in a single year.

Surely, there can’t be any more profitable investments or can there?

Well, we’ll leave that for the readers to decide.

The paper concludes in the end that the increase in revenue is, without doubt, sizeable.

Moreover, it also gives more credence to the complaints made by the recording industry against the likes of YouTube and Google.

The complaints themselves are pretty focused.

That, services like YouTube and Google eat too much of the overall pie and refuse to share the pie with people who help them make the pie.

Get it?

Great.

Can The Study Achieve Anything?

At the very least, the study should be able to raise the awareness levels amongst the public.

But one thing has to be said.

The study could not have come at a better time from the perspective of the industry.

TorrentFreak took this opportunity and asked the co-author of the study George S.Ford the motivation for the paper.

The hugely popular torrent news site also asked Ford if any a certain music industry company or entity had sponsored the paper or financed the study.

Ford replied and said that they did a lot of work in the copyright business.

And because of that, he had run into problems of this type in numerous other settings.

He cited examples of SDARS III case which took place before the CRB.

Ford also told TorrentFreak that he wanted to do some research on the music industry revenue topic for a long time and finally managed to get things in motion just recently.

He also told TorrentFreak that the Phoenix Center did not take money in order to perform particular projects.

The only time it does so is when the government itself asks the center to work on a given project.

Even then, Ford said, they indicate within the paper where the funding came from and that the research received funding for that project.

He ended his comment by saying that the authors of the study clearly mentioned in the paper that the study relied heavily on RIAA provided data.

Of Course, The Study Doesn’t Answer The Main Question

And what was the main question you may ask?

Well, TorrentFreak specifically asked if the paper received some form of funding from organizations such as RIAA and IFPI.

TorrentFreak also asked if there were any other donors or even supports of the study and of The Phoenix Center.

At the time of writing, the authors of the study did not respond to these questions.

Conclusion

This isn’t the first time The Phoenix Center has produced a study on a specific industry.

In fact, the center has produced several papers.

Most of those papers were pro-industry.

Before the “YouTube” study, The Phoenix Center also published another study which criticized Megaupload.

And naturally, that study received applause from rightsholders groups such as the MPAA.

MPAA, as we all know, has never liked internet platforms such as Megaupload and has voiced its criticism about Megaupload in the past as well.

If you want to read the whole paper you can simply click here.

 

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