Music industry wants legislation to force Google to up YouTube royalties

Online video streaming service YouTube has been criticised for not paying enough royalties to the music industry, after representatives from the Google company this week said that the company had paid over $1bn this year to musicians.

YouTube's chief business officer Robert Kyncl had brought up the subject in a blog post earlier this week.

"Even as music subscriptions have been growing faster than any other subscription type, advertising is another powerful driver of revenue," Kyncl wrote. "In fact, in the last 12 months, YouTube has paid out over $1bn to the music industry from advertising alone."

However, on Wednesday representatives from the music industry did not respond positively to the "good news" from YouTube, saying the world's largest on-demand music service was paying artists and producers less per user than smaller companies.

A spokesperson for global music organisation IFPI said that the "unexplained numbers" just don't add up.

"With 800m music users worldwide, YouTube is generating revenues of just over $1 per user for the entire year," the body said.

"This pales in comparison to the revenue generated by other services, ranging from Apple to Deezer to Spotify. For example, in 2015 Spotify alone paid record labels some $2bn, equivalent to an estimated $18 per user."

Those in the music industry have aggressively targeted free streaming sites such as YouTube as being a drain on their profits, with the likes of Lady GaGa, Paul McCartney and Coldplay all having written letters to the US Congress requesting action on the issue.

"YouTube, the world's largest on-demand music service, is not paying artists and producers anything like a fair rate for music," the IFPI said. "This highlights more than ever the need for legislative action to address the 'value gap' that is denying music rights holders a fair return for their work."

The body's Global Music Report 2016, released earlier this year, reported a 10.2% rise in digital revenues to $ 6.7b, with a 45.2% increase in streaming revenue offsetting the decline in downloads and physical formats.

But it pointed out that while music is being consumed at record levels, the explosion in consumption is not being matched by a similar rise in remuneration for the artists who make the music and the record labels which fund and develop it, which is said was because of a market distortion resulting in a "value gap" that deprives artists and labels of "a fair return for their work".