YouTube’s recent decision to renegotiate their licensing terms in order to launch a subscription based music service has not gone completely to plan. The fact that many independent (indie) music labels have decided not to sign the contracts could have serious repercussions for YouTube’s dominant market position. As Google owns YouTube, it is unknown what affect this will have on Google’s overall market position.
Google has been pushing Indie labels which represent artists such as Radiohead, the Arctic Monkeys and Adele to sign what are seen as unfavorable terms. YouTube’s head of content and business operations Robert Kyncl, has said that videos from labels which have not signed the new terms and conditions will start to be blocked in a few days.
This action has been viewed as aggressive strong arming by Google. A spokesperson for the British Phonographic Industry (BPI) said that, “We think it is wrong for YouTube to threaten to ostracise certain independents... because they are unwilling to surrender to a take it or leave it ultimatum.”
Many people have taken a similar stance pointing out just how important these bands are to any music streaming service. Alison Wenham owner of the Worldwide Independent Network said, Google is "making a grave error of commercial judgment in misreading the market. We have tried and will continue to try to help YouTube understand just how important independent music is to any streaming service and why it should be valued accordingly, by not giving their subscribers access to independent music YouTube is setting itself up for failure... The vast majority of independent labels around the world are disappointed at the lack of respect and understanding shown by YouTube."
Not So Saint Like
This kind of bullying action is quite different from the recent image that Google has been portraying of themselves, namely the self-driving car which they claim could effectively eliminate traffic accidents and their semi philanthropic plan to spread internet to every corner of the world using their own drone satellites. Both are plans which Google are claiming are going to change the world for the better.
The ’right to be forgotten’
It is even more surprising that Google would take this gamble with their most successful Social Media service, considering their other recent problems. Google has been having problems with the ‘right to be forgotten’ which is a new legal requirement for Google to remove, old and irrelevant information from the search engine results page.
The recent problems that they have been encountering with the so called ‘right to be forgotten’ threatens Google’s entire business model. The vast majority of Google’s income comes from targeted marketing. The ‘right to be forgotten’ threatens this because much of the information that Google gathers about people is from their search engine results.
Google annoying too many customers is dangerous and it will undoubtedly cause them to lose some ground to rivals such as Vimeo. Internet users are notoriously fickle and will vote with their feet by moving to a rival service if they can’t get what they want. Google do not appear worried with Mr Kncl saying, “While we wish that we had a 100 per cent success rate, we understand that is not likely an achievable goal and therefore it is our responsibility to our users and the industry to launch the enhanced music experience,”
Google are playing a dangerous game by blocking the indie label bands. It has shown that they are not as pure hearted as they try to show. It also made it clear that they have not truly considered the commercial ramifications of this course of action.