Posted June 17, 2014 4:10 pm by with 0 comments

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XL RecordingsThis is one of those stories that sounds so wrong that I thought it was a rumor blown out of portion . . . hard to say since most reports on the subject all lead back to one article from the Financial Times.

Basically, it goes like this. YouTube is about to launch a beta test of their new streaming music service which would compete with Spotify and Amazon’s new music service. In order to offer streaming music, record labels had to sign a licensing agreement but several indie labels say the agreement isn’t fair and have refused to sign.

YouTube could just leave those labels out of the streaming service but according Robert Kyncl, YouTube’s head of content and business operations (according to the Financial Times), YouTube is going to block all videos from labels who haven’t signed. Or have I misinterpreted the facts. Guess we’ll find out soon enough when Adele, Arctic Monkeys and The Horrors disappear from YouTube.

The tough thing here is that YouTube is a business and, as such, can refuse service to anyone they choose but is it good business? Is it worth the fan backlash just to prove a point? I can’t imagine that these companies represent such a large portion of revenue that YouTube can’t make the service work without them. So why threaten them with expulsion?

The larger issue is the setting of a precedent. After YouTube boots indie music producers off for not joining the streaming service, what’s next? Suppose YouTube decides to create a custom beauty and style network that offers exclusive video access for a fee. What happens to the top vidders who don’t want to join? Will they get booted?

And that leads me to a larger, disturbing thought. Think about all the people who depend on a third party site for their living – the eBayers and Etsy store owners and the YouTubers. Talk about putting all of your nest eggs into one basket!

Unless you work for an indie music label, this story isn’t going to affect you directly, but take it as a warning of things to come.