In recent months we have followed with interest the controversy arising from complaints by independent labels against the practices of Google and its subsidiary Youtube, due to the introduction by this economic group of its expected streaming subscription service.
The independent labels, grouped together in the organization IMPALA (http://www.impalamusic.org/), have complained that Youtube has abused its dominant position, by attempting to force smaller record labels to join Youtube’s streaming platform under worse contractual conditions than the “majors”, and by threatening to withdraw their videos from Youtube if they do not accept these conditions.
The contract allegedly imposed on independent labels by Youtube was leaked by specialized media (http://www.digitalmusicnews.com/permalink/2014/06/23/fk-heres-entire-youtube-contract-indies) and certainly contains some remarkable clauses. For example, a permanent “least favoured nation” clause, whereby independent labels are obliged to accept lower royalties if these are negotiated by the “majors”. The situation reached such a point that Youtube announced that within a matter of days, it would begin to delete the videos of labels which refused to accept the terms of Youtube’s licenses for its new streaming service.
Nevertheless, fuelling the controversy even more, some independent operators like BELIEVE DIGITAL (http://www.believedigital.co.uk/) stated that the economic conditions proposed by Youtube were in line with market conditions and no threats to withdraw content from the Youtube portal had been received. http://www.musicweek.com/news/read/youtube-why-one-significant-indie-music-group-has-signed-licensing-deal/058772-
IMPALA’s response in defense of its members was twofold: firstly, it took mass media action, which spread like wildfire on social networks and throughout the music industry, condemning what it viewed as an abusive practice by Youtube; secondly, a complaint was lodged before the Community competition authorities, accusing Google’s subsidiary of practices that were abusive of its dominant position contrary to Community competition law (http://www.impalamusic.org/content/dispute-between-youtube-and-independent-music-companies-%E2%80%93-formal-process-starts-brussels).
Finally, according to some media reports, Youtube decided to backtrack and withdraw its threat to remove videos from its platform, with this being interpreted as a small victory for the independent labels.
The conclusion to be drawn from this episode is that, for weaker operators in an industry such as the music industry, it is not just important –but essential- to have a strong sector association, with a suitable communication policy, efficient counselling and defense of the interests of its members. This is the only way to explain this small victory against Youtube or IMPALA’s other successes of the past, such as that in the case of Impala v. Commission (T-464/04) in which, for the first time in history, the Court of First Instance set aside an European Commission decision on an economic concentration (the Sony-BMG merger).