Strange news from across the pond: due to a dispute over licensing, the Performing Rights Society (PRS) in the UK, YouTube is no longer going to host music videos in the UK. For a more detailed breakdown of the situation, cnet as a thorough write-up, but gist of it is that PRS want more licensing fees for the right to host the material, the costs of which YouTube considered "prohibitive." There is also reported to be a lack of transparency about what content will be included in the licensing deal. Meanwhile, the PRS suggested that YouTube is not paying a fare share of their revenue.
It's somewhat unclear as to what stands at the heart of the controversy, whether it is centrally a question of IP or of revenue share, though it does speak to the struggle and difficulty of finding models ownership and compensation in the digital space and takes us towards a much more complex problem of how to determine whether content drives people to YouTube or if the social relations on YouTube drive the circulation of content. According to the cnet article, there is also the question of if record companies are profiting from having their content on YouTube. Putting aside the issue of whether or not YouTube is sharing enough of its revenue, this issue of the "profitability" of putting music videos on YouTube seems, in my mind, to miss the point.
Music videos, to my knowledge, have generally been used as promotional materials. Attempting to charge google for high licensing fees in order to play videos seems to be a fundamental lack of understanding of both music videos and of youtube. Youtube is a fantastic place to discover new artists that may not be able to get significant radio play. What's more, with youtube videos, you can send links to your friends to spread the word directly about songs you enjoy, which you can't do with a song on the radio. In short, record companies and license holders may not feel as if they're making money by having their videos on Youtube, but the truth is that they're certainly not making money from NOT having them there. Youtube isn't diverting potential record-buyers, after all. Streaming online video isn't exactly the most flexible or portable way to enjoy music. What Youtube does provide is a source of low-cost, high visibility, robust promotion that has the potential to engage audiences in a way that broadcast mediums, even ones that pay high licensing fees, can't. We only have to look at examples such as Soulja Boy to see that.
This speaks also to another key issue, which is the fallacy of "free." By not charging licensing fees, record companies feel that they're giving away their music for "free." This has been the dominant discourse overall when media producers and critics alike talk about putting content on sites like Youtube or Hulu or last.fm. But we have to remember that just because you're not charging people doesn't mean you're not getting anything in return. Putting things on Youtube is giving content away for free if the only measure of value you have is money, and more specifically, direct payment. By pretending all of it is "free" of any form of return, any for of profit or benefit, we mask the crucial forms of exchange happening between media corporations and audiences. Non-monetary exchanges are, in fact, the exact opposite of "free" in the sense that they create social bonds, community, and a sense of goodwill and exchange. These may be implicit, they may be ambiguous and informal, but they do exist, and for musicians and entertainers, this is the kind of value they need, because this is the kind of value that translates into fans.
Or to put it another way, Youtube and networked social spaces where people share, create, and circulate content are growing increasingly central to how we consume and engage with media. As as result, the real questions companies need to ask themselves is this: whether or not they feel they are profiting from being in these spaces, can they afford to not be there?