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Leaked memo from indie label says YouTube’s terms are fair

Earlier this week, controversy erupted over reports that YouTube will block videos from indie label artists who haven’t signed the licensing agreement for YouTube’s upcoming paid music subscription service. The Worldwide Independent Network (WIN), which represents indie labels claims that YouTube’s terms are unfair and the new contract pays less than Spotify and other streaming services.

Now, the Verge has obtained a leaked memo from European indie label Believe Digital, which states that YouTube’s offer to indie labels is not only comparable to the rates Spotify and its competitors offer, but actually fair. The memo also includes a list of other indie labels that Believe Digital says have agreed to YouTube’s terms.

Believe Digital says that its share of revenue from the videos will actually increase because of the deal.[/pulquote]

Believe Digital signed with YouTube after six months of tough negotiations in February 2014. The new contract reportedly covers content available on YouTube’s current free service, as well as videos uploaded on the upcoming paid service. Believe Digital says that its share of revenue from the videos will actually increase because of the deal.

“The new contract includes a significant increase of the revenue share rate on UGC [user-generated content] for sound recording. This type of use is currently the largest source of revenues from YouTube,” the memo reads.

The memo also says that Believe Digital thinks YouTube offered its indie artists the same rates it offered to major labels. This revelation is particularly surprising, given the fact that WIN claims YouTube offered to pay major recording labels higher rates than the indies.

“From a market standpoint, the information we have is that the rate Believe Digital has negotiated with YouTube for the subscription service is strictly identical to the rate negotiated by major labels,” the memo adds.

As if aware that its comments might upset WIN, the internal memo admits that the organizations concerns about a YouTube monopoly over music videos may still have merit. Believe Digital also says it did not receive threats from YouTube about blocking content.

“Aside from the anti-competition issues raised by WIN (blocking of the content by YouTube, which we can not comment on other than to say that we have not experienced them ourselves), my personal opinion is that the views recently expressed by WIN and IMPALA address true, important, and very legitimate concerns,” the memo states.

In addition, the memo mentions several other indie labels that Believe Digital claims have signed an agreement with YouTube. Among those named are The Orchard/IODA, Toolroom, Kontor Records, Made in Etaly, T-Series, YG Entertainment, SM Entertainment, Farolatino, OneRPM, Spinnin Records, Ultra Records, and others.

So far, YouTube has remained almost completely silent on the issue in hopes of avoiding bad press. YouTube did tell Digital Trends that negotiations are ongoing with the remaining indie labels and YouTube is undoubtedly reluctant to block indie artists’ videos, especially given the negative response this whole debacle has unleashed on the company. It is unknown when YouTube will block select video content, but some reports hint that it will start next week, perhaps as early as Monday June 23.

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