YouTube’s UK Music Deal Breaks Down Over Costs; Thousands Of Videos Blocked

imageAt 6pm GMT Monday, YouTube started blocking access to thousands of music videos in the UK users after the breakdown of negotiations to renew its rights deal with the main royalty collector. Back in August 2007, Google (NSDQ: GOOG) had struck its first such deal with a royalty society, with MCPS-PRS Alliance, gaining licenses on 10 million pieces of music in return for a flat fee, which was never disclosed. That’s now expired, however, and GooTube’s EMEA video partnerships director Patrick Walker has gone public to reveal negotiations have broken down over price…

Walker, via YouTube’s blog: “PRS is now asking us to pay many, many times more for our licence than before. The costs are simply prohibitive for us – under PRS’ proposed terms, we would lose significant amounts of money with every playback. In addition, PRS is unwilling to tell us what songs are included in the licence they can provide so that we can identify those works on YouTube – that’s like asking a consumer to buy a blank CD without knowing what musicians are on it.”

Far from PRS For Music (as it has been renamed) asking for more, PRS CEO Steve Porter issued a statement: “Google has told us they are taking this step because they wish to pay significantly less than at present to the writers of the music on which their service relies, despite the massive increase in YouTube viewing. This action has been taken without any consultation with PRS for Music and in the middle of negotiations between the two parties.”

The net result – all music videos either uploaded or “claimed” by labels started getting blocked at 6pm GMT. The original deal covered both official videos uploaded by labels and songs used as soundtracks by mashup creators. Negotiations will continue, Walker said. What seems to have transpired is PRS For Music has upped the ante and asked YouTube to pay what it says is a fair share for material that comprises a hefty quantity of its content. For YouTube, which is already challenged to find a business model that can generate profit, this is a further blow, following Warner Music Group’s refusal to renew. And it’s a high-risk bargaining strategy, betting, as it does, that PRS For Music would rather secure exposure for musicians.

Pandora abandoned plans to launch fully in the UK last year, complaining PRS For Music fees were excessive.