A few weeks ago, YouTube announced changes to its site that will likely remove many videos uploaded by independent record labels.

YouTube is beginning a paid music streaming service, and is offering non-negotiable contracts to interested partnering record labels. These contracts, according to The Worldwide Independent Network and Billboard.com, “are highly unfavorable, with non-negotiable terms and undervalue existing rates in the marketplace from music-streaming sites such as Spotify, Rdio and Deezer.”

While there are many streaming video options out there, YouTube is without a doubt the biggest player, but with its new contractual terms any label or band that doesn’t agree to their payout amounts will have their videos blocked–meaning smaller, indie labels and their bands will be out. So, is this just another example of corporate greed or a fair way to monetize a mature streaming music video service?

YouTube has reportedly already negotiated lucrative deals with Sony, Warner Bros. and Universal, creating a community for big name, high-value artists. In the short term, this might seem like the logical next step for a video platform that sees an opportunity to make big money. But the artists that will likely be affected by this content blacklisting–bands like Adele, Radiohead, The White Stripes, Vampire Weekend, amongst others – have strong core followings and will likely direct their viewership and advertising revenue to sites like Spotify, Vimeo or the revamped MySpace.

From a brand perspective, YouTube’s favorability is likely to take a hit the way Netflix did with Quikster. By alienating artists and their fans, YouTube is losing sight of its original purpose – video and content sharing. As a result, its once devoted user base will become disenchanted and reduce their viewing hours. YouTube is likely to lose a significant amount of market share and advertising revenue because of it.

We doubt the independent record labels will bend to YouTube’s demands; they will merely find new channels to promote their work. In the short term, YouTube’s actions will create confusion, frustration and animosity towards the video sharing website. In the longer term, it will result in a split between mainstream and indie listeners with the latter spreading bad juju about their once adored site.

It will be interesting to see if the new revenue model will be a boon to YouTube or the loss of independents will take it down.

Where do you come out on YouTube’s new revenue plan? Where do you stream music or find new bands to listen to? Let us know @MagnetoAgency!

 

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