Leaked YouTube indie label contract shows royalty suspensions

25 Jun 2014

An example of a contract video-sharing site YouTube has sent to indie labels reveals YouTube stipulates that smaller labels must give up their royalty rates if a much larger label agrees to a lower rate.

Digital Music News leaked the contract with a rather blunt headline summing up the feelings of indie labels who feel the contract designed to facilitate the Google-owned video service’s move into a subscription music service will marginalise them and leave many smaller bands with little to no exposure or financial future.

All Google has to do to bring the royalty rate of an indie label down to meet the price of the much larger labels is to simply send an email that provides 30 days’ notice.

The conditions set out by YouTube usually never appear in the public eye, as the service is well-known for asking its partners to sign agreements to never reveal the terms of their contracts or royalty figures made from the number of video views.

The YouTube music service is reported to be offering one almost identical to its largest competitor Spotify, whereby there will be the option of a free ad-supported service while an ad-free €10 per month version will also be available.

In the past week, YouTube has said that while agreements have been reached with some of the largest music labels in the world, it would appear the smaller ones are being left behind. YouTube claims only 5pc of those on YouTube will be affected by the move to a subscription service.

YouTube music image via Shutterstock

Colm Gorey was a senior journalist with Silicon Republic