1 00:00:00,080 --> 00:00:02,320 Speaker 1: You may think of YouTube as a place to watch 2 00:00:02,440 --> 00:00:07,880 Speaker 1: music videos, but all music streamed worldwide is streamed by YouTube, 3 00:00:07,960 --> 00:00:12,360 Speaker 1: not Apple, Amazon, or Spotify. YouTube is also now the 4 00:00:12,480 --> 00:00:16,599 Speaker 1: music streaming service that the music industry, from stars to labels, 5 00:00:16,800 --> 00:00:19,800 Speaker 1: is united to battle. Of course, the issue is money, 6 00:00:19,880 --> 00:00:23,400 Speaker 1: with music labels saying that YouTube pays less for songs 7 00:00:23,440 --> 00:00:26,560 Speaker 1: and other music streaming sites and asking for a change 8 00:00:26,560 --> 00:00:30,080 Speaker 1: in the federal law that protects sites like YouTube from 9 00:00:30,120 --> 00:00:35,440 Speaker 1: being responsible for what users posts. My guests are Crystallia Garcia, 10 00:00:35,560 --> 00:00:39,280 Speaker 1: professor at the University of Colorado Boulder Law School, and 11 00:00:39,400 --> 00:00:42,400 Speaker 1: Larry Miller, director of the Music Business Program at n 12 00:00:42,560 --> 00:00:46,280 Speaker 1: y U. Larry, will you explain how YouTube pays to 13 00:00:46,360 --> 00:00:52,159 Speaker 1: stream songs compared to other services? Sure under the Digital 14 00:00:52,159 --> 00:00:58,360 Speaker 1: Millennium Copyright Act, of which was put in place in 15 00:00:58,520 --> 00:01:03,800 Speaker 1: order to make mostly common carriers and internet service providers 16 00:01:04,680 --> 00:01:11,600 Speaker 1: UH not liable for the otherwise UH infringing behavior of 17 00:01:12,360 --> 00:01:17,440 Speaker 1: there are customers who were using those networks. YouTube benefited 18 00:01:17,600 --> 00:01:20,720 Speaker 1: from the safe harbor provision of the d m C. A. 19 00:01:21,000 --> 00:01:23,399 Speaker 1: You know, some years later, and it's worth mentioning the 20 00:01:23,440 --> 00:01:28,319 Speaker 1: YouTube itself is only a little more than a decade 21 00:01:28,400 --> 00:01:32,080 Speaker 1: old at this point, and so the law that protects 22 00:01:32,400 --> 00:01:39,000 Speaker 1: UH internet service providers from the otherwise infringing behavior behavior 23 00:01:39,240 --> 00:01:46,080 Speaker 1: of its customers uh uh get predated YouTube by a 24 00:01:46,760 --> 00:01:50,880 Speaker 1: number of years. And so YouTube and a number of 25 00:01:51,160 --> 00:01:55,680 Speaker 1: other streaming businesses that rely on the d m c 26 00:01:55,880 --> 00:02:00,200 Speaker 1: A to be able to UH immunize them for them 27 00:02:00,800 --> 00:02:05,600 Speaker 1: from infringement claims, are are able to benefit in a 28 00:02:05,680 --> 00:02:11,840 Speaker 1: in a very direct way, uh from the from the 29 00:02:11,919 --> 00:02:15,040 Speaker 1: from the d m c A, and UH and the 30 00:02:15,080 --> 00:02:19,000 Speaker 1: record companies and music publishers who own the rights in 31 00:02:19,200 --> 00:02:23,320 Speaker 1: the music that's being streamed are not happy about the 32 00:02:23,360 --> 00:02:27,240 Speaker 1: gap between the amount of value that YouTube gets from 33 00:02:28,160 --> 00:02:30,720 Speaker 1: from the ads that they run and the amount that 34 00:02:30,800 --> 00:02:35,400 Speaker 1: they share with those companies Chrystelia. So, does YouTube have 35 00:02:35,560 --> 00:02:39,480 Speaker 1: the upper hand in the negotiations with music labels or 36 00:02:39,639 --> 00:02:44,200 Speaker 1: is there anything that the music labels can do? Um. 37 00:02:44,240 --> 00:02:47,160 Speaker 1: That's a great question, uh and and the answer is 38 00:02:47,520 --> 00:02:49,880 Speaker 1: they do have an upper hand for many of the 39 00:02:49,880 --> 00:02:54,440 Speaker 1: reasons that Larry explained, UM, predominantly being that YouTube qualifies 40 00:02:54,560 --> 00:02:57,959 Speaker 1: as a quote service provider under the d m c 41 00:02:58,120 --> 00:03:00,480 Speaker 1: A scafe harbor, meaning that they can take a vantage 42 00:03:00,520 --> 00:03:02,560 Speaker 1: of this. You know what some are calling a loophole 43 00:03:03,200 --> 00:03:06,560 Speaker 1: that allows them to be exempt from infringing content that's 44 00:03:06,600 --> 00:03:09,800 Speaker 1: uploaded by their users, giving YouTube when it goes to 45 00:03:09,840 --> 00:03:14,200 Speaker 1: the negotiation table right a starting baseline of zero um. 46 00:03:14,600 --> 00:03:17,880 Speaker 1: That is to say that both parties, the record labels 47 00:03:17,960 --> 00:03:22,120 Speaker 1: or content owners and YouTube know that whether YouTube licenses 48 00:03:22,280 --> 00:03:25,520 Speaker 1: the content that some agreed upon rate or not, the 49 00:03:25,560 --> 00:03:29,360 Speaker 1: content will be made available because their users will continue 50 00:03:29,360 --> 00:03:32,160 Speaker 1: to upload it. And in order to take advantage of 51 00:03:32,160 --> 00:03:35,840 Speaker 1: the safe harbor, all YouTube need do is respond to 52 00:03:36,600 --> 00:03:42,240 Speaker 1: takedown notices by removing the content. Notably, and importantly, the 53 00:03:42,320 --> 00:03:45,080 Speaker 1: law does not have any requirement for YouTube to make 54 00:03:45,120 --> 00:03:48,080 Speaker 1: affirmative determinations as to the legal status of any of 55 00:03:48,080 --> 00:03:51,400 Speaker 1: the contents uploaded by their users, nor is the takedown 56 00:03:51,440 --> 00:03:55,000 Speaker 1: procedure required to prevent uploaded the same. So, in other words, 57 00:03:55,000 --> 00:03:58,000 Speaker 1: both parties know coming to the negotiation table that the 58 00:03:58,040 --> 00:04:01,360 Speaker 1: content will be there either way, giving YouTube an upper 59 00:04:01,400 --> 00:04:05,840 Speaker 1: hand um in in the negotiations. In that way. That said, 60 00:04:05,920 --> 00:04:11,560 Speaker 1: the content owners record labels in this case do have litigation, 61 00:04:11,720 --> 00:04:15,240 Speaker 1: of course, as as a threat um. If they can 62 00:04:15,280 --> 00:04:17,400 Speaker 1: claim that this is not being done in good faith, 63 00:04:17,480 --> 00:04:19,960 Speaker 1: they can try to make some arguments around whether YouTube 64 00:04:19,960 --> 00:04:23,120 Speaker 1: should have known that these things were happening. I think 65 00:04:23,160 --> 00:04:27,279 Speaker 1: the more interesting argument is, as YouTube moves into the 66 00:04:27,320 --> 00:04:31,720 Speaker 1: paid subscription space with its YouTube Music and YouTube read 67 00:04:32,160 --> 00:04:34,960 Speaker 1: as I believe they're calling it um sort of the 68 00:04:34,960 --> 00:04:38,400 Speaker 1: the potential for not only the record labels to get 69 00:04:38,400 --> 00:04:41,520 Speaker 1: in on sort of the the litigation piece of this, 70 00:04:41,680 --> 00:04:45,120 Speaker 1: but perhaps they're the potential competitors like Spotify to say 71 00:04:45,160 --> 00:04:49,880 Speaker 1: that this is giving YouTube a competitive advantage, an unfair 72 00:04:49,880 --> 00:04:53,920 Speaker 1: competitive advantage. Larry Warner Music Group did sign a new 73 00:04:54,040 --> 00:04:59,520 Speaker 1: licensing deal with YouTube, but does that mean it basically caved. Well, 74 00:04:59,560 --> 00:05:02,760 Speaker 1: I wouldn't say that they cave, but I would say that, uh, 75 00:05:02,880 --> 00:05:05,760 Speaker 1: all three of the major music companies and there are 76 00:05:06,560 --> 00:05:12,080 Speaker 1: only three major music companies left in this highly consolidated space, 77 00:05:12,120 --> 00:05:15,640 Speaker 1: and they are One or Music Group, Sony and Universal, 78 00:05:16,160 --> 00:05:20,120 Speaker 1: that that all three YouTube licensing deals were set to 79 00:05:20,200 --> 00:05:24,440 Speaker 1: expire it around the same time, and so uh, the 80 00:05:24,520 --> 00:05:29,200 Speaker 1: Warner deal was apparently finished first. I understand the Universal 81 00:05:29,440 --> 00:05:36,040 Speaker 1: and Sony are still in negotiation regarding the the terms 82 00:05:36,160 --> 00:05:39,720 Speaker 1: around their next licensing deal. So I wouldn't say that 83 00:05:39,760 --> 00:05:44,960 Speaker 1: they cave necessarily any more than than any other company 84 00:05:45,040 --> 00:05:49,520 Speaker 1: that writes a license with YouTube will knowing fully well 85 00:05:49,600 --> 00:05:54,080 Speaker 1: that that YouTube is able to benefit from the from 86 00:05:54,120 --> 00:05:56,960 Speaker 1: the safe harbor. And if I can, if I can 87 00:05:57,040 --> 00:06:01,880 Speaker 1: just make make one other point here that uh, YouTube 88 00:06:01,920 --> 00:06:06,800 Speaker 1: is responsible for a just a gigantic amount of video 89 00:06:06,880 --> 00:06:11,440 Speaker 1: consumption in the world that should really go without saying, 90 00:06:11,600 --> 00:06:15,080 Speaker 1: you know, but that when it comes to music streaming, 91 00:06:15,640 --> 00:06:19,039 Speaker 1: YouTube is responsible for about a quarter of all of 92 00:06:19,040 --> 00:06:23,599 Speaker 1: the music that streamed. But that the spotifys and the 93 00:06:24,000 --> 00:06:29,120 Speaker 1: Apple musics of the world need to license directly UH 94 00:06:29,160 --> 00:06:32,880 Speaker 1: and UH and pay quite a lot more than than 95 00:06:32,960 --> 00:06:36,760 Speaker 1: YouTube does for their licenses with the record companies and 96 00:06:36,839 --> 00:06:42,000 Speaker 1: music publishers Crystilia, the music industry has been asking for 97 00:06:42,080 --> 00:06:47,559 Speaker 1: a change in the Digital Millennium Copyright Digital Millennium Copyright Act. 98 00:06:48,240 --> 00:06:56,159 Speaker 1: Is that likely and are there dangers with that? Right? Um? Likely? 99 00:06:57,200 --> 00:07:00,000 Speaker 1: I think it's likely that we will get some adjustments 100 00:07:00,000 --> 00:07:02,440 Speaker 1: of the digital money and copyright actors you're often called 101 00:07:02,440 --> 00:07:04,880 Speaker 1: the d n c A. And one of the reasons, 102 00:07:04,920 --> 00:07:08,760 Speaker 1: as Larry noted, that this was you know, past and 103 00:07:08,880 --> 00:07:12,640 Speaker 1: acted in so things have changed dramatically since the time 104 00:07:12,640 --> 00:07:15,800 Speaker 1: that it was passed, and it would be expected that 105 00:07:15,880 --> 00:07:18,640 Speaker 1: as we are moving into what the former Register of 106 00:07:18,680 --> 00:07:20,960 Speaker 1: Covers was calling the next Great Copyright Act. Right that 107 00:07:21,040 --> 00:07:25,720 Speaker 1: Congress is actively considering an amendment or an amended Copyright Act, 108 00:07:25,760 --> 00:07:28,200 Speaker 1: that we would see UM a lot of changes to 109 00:07:28,320 --> 00:07:30,640 Speaker 1: account for the changes in technology and the changes in 110 00:07:30,760 --> 00:07:35,120 Speaker 1: consumer behavior. UM. Whether or not they would get rid 111 00:07:35,120 --> 00:07:37,480 Speaker 1: of the safe harbor alltogether, I think I would be 112 00:07:37,560 --> 00:07:41,200 Speaker 1: highly surprised if that happened, because there are a lot 113 00:07:41,240 --> 00:07:43,640 Speaker 1: of concerns with getting rid of it all together. Right 114 00:07:43,720 --> 00:07:47,560 Speaker 1: that this UH, this question of the value gap between 115 00:07:48,080 --> 00:07:51,320 Speaker 1: services like YouTube and services like Spotify, UM can be 116 00:07:51,440 --> 00:07:54,440 Speaker 1: quantified and dealt with. But that's only one of the 117 00:07:54,640 --> 00:07:58,080 Speaker 1: parties that take advantage of this. UM. If YouTube could 118 00:07:58,120 --> 00:08:01,000 Speaker 1: not take advantage of this day harbor at all, if 119 00:08:01,000 --> 00:08:03,800 Speaker 1: we get away with safe harbors altogether, UM, it was 120 00:08:03,880 --> 00:08:07,160 Speaker 1: cripple the service. UM. Not just YouTube, which we may say, well, 121 00:08:07,320 --> 00:08:10,960 Speaker 1: that's just one business, but the concept of having these 122 00:08:11,200 --> 00:08:15,640 Speaker 1: UH shared services where users can go on and post 123 00:08:15,720 --> 00:08:17,920 Speaker 1: videos to share with their families and this sort of thing. 124 00:08:18,000 --> 00:08:19,960 Speaker 1: So there are other not I'm going to have to 125 00:08:20,000 --> 00:08:22,320 Speaker 1: I'm sorry, you're gonna have to stop you there. That's 126 00:08:22,400 --> 00:08:26,000 Speaker 1: Crystallia Garcia, professor at the University of Colorado, Boulder, Law 127 00:08:26,040 --> 00:08:28,920 Speaker 1: School and Larry Miller, director of the Music Business Program 128 00:08:28,960 --> 00:08:32,400 Speaker 1: at n YU. That's it for this edition of Bloomberg Law, 129 00:08:32,720 --> 00:08:35,800 Speaker 1: thanks to our producer David Sutraman and our technicol director 130 00:08:36,080 --> 00:08:36,960 Speaker 1: Charlie Ulmer.