On Tuesday of this week news broke that YouTube would begin blocking videos from artists on indie labels that had not signed on to its new terms, a set of contracts it's making partners agree to before it launches a paid streaming service later this year. Fans and artists were understandably upset, but YouTube insisted that the majority of its partners in the music industry, over 90 percent, had already signed on.
Today a leaked memo, obtained by The Verge from an industry source, gives the perspective of one indie label that did sign on. Believe Digital, an independent label based mostly in Europe, saidthat it agreed to the terms in February of 2014, after six months of negotiations. The contract covered both the preexisting YouTube service and the yet-to-be-launched paid streaming service. Critically, Believe says it was a good 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." Details of the leaked memo were first reported by Music Week.
Believe's memo says that it researched the rates YouTube was offering and found they were on par with those offered by services like Spotify, Deezer, and Rdio. Critically, it was also the same deal YouTube gave the big players. "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 from Believe was careful to voice support for WIN, the industry trade group that has been openly criticizing YouTube's new terms and its plans to block access to videos from artists on labels that don't sign. "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."