Exhibit 5423 How Online Music Is Screwing Artists: the YouTube Edition

Recently, the Merlin Network, the main indie label digital rights agency, released a survey of their members. According to Digital Music News, there’s good news and bad news. The good news: although income from audio streaming is still pretty sad, it’s increased considerably.

Boosted by a “significant uptake” in audio streaming, the global digital rights agency’s payouts have increased 52% year-on-year. Revenues paid out have increased more than eightfold….

Underscoring the strength of music streaming in the music industry, the report reads, “Nearly two-thirds (64%) of Merlin members report that audio streaming accounts for the majority of their digital revenues. This marks a significant leap from 2016, when less than half (46%) said this was the case.”

However, while audio streaming services like Spotify provide major revenue for Merlin members, video streaming has significantly underperformed. The global digital rights agency saw “only negligible growth from video streaming.”

As a result, there is now a staggering gap between audio streaming and video.

“Audio streaming growth outstrips video 3-to-1 as distributions to independent labels hit $353m.” 

The main reason for this discrepency: YouTube.

the latest IFPI report shows that user-uploaded video platforms [YouTube] have only paid out $553 million to rightsholders. The Google-owned video platform commands an audience of over 900 million users. By contrast, on-demand audio streaming services generated $3.9 billion with just 212 million users.

Industry critics argue that YouTube pays far less than it should, primarily through the creative use of legal loopholes.  Last year, over 180 musical artists from Lady Gaga to Ne-Yo signed on to an open letter to Congress, charging that major tech players like YouTube were using loopholes in the Digital Millennium Copyright Act (DMCA) to rip off artists.

This law was written and passed in an era that is technologically out-of-date compared to the era in which we live. It has allowed major tech companies to grow and generate huge profits by creating ease of use for consumers to carry almost every recorded song in history in their pocket via a smartphone, while songwriters’ and artists’ earnings continue to diminish. Music consumption has skyrocketed, but the monies earned by individual writers and artists for that consumption has plummeted.

The DMCA simply doesn’t work. It’s impossible for tens of thousands of individual songwriters and artists to muster the resources necessary to comply with its application. The tech companies who benefit from the DMCA today were not the intended protectorate when it was signed into law nearly two decades ago.

And that, boys and girls, is another example of why any solution to the robot/AI employment threat must ensure we build grassoots power at the heart of this new economy. Small changes in the rules governing creative works can make a huge difference in who makes money off of these works and who doesn’t. And economic leverage can also make a real difference: one main reason why audio streaming is doing so well, Digital Music News, is that Spotify wants to have a successful IPO.

As it pushes ahead with its IPO plans, Spotify has settled major lawsuits and attempted to pay out more. 

If we want all communities to benefit from the coming economy, we need to ensure that at least some people in every community has an in-the-trenches understanding of how this new economy works, and every community needs the economic and political power to guarantee a real seat at the table.

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