YouTube/PRS Details: Advance Payment, Three-Year Deal, Figures Secret

Google (NSDQ: GOOG) is putting up another wadge of advance cash for the revised terms of its renewed license for YouTube to use music in the UK, an agreement that ends an at times acrimonious dispute (see our earlier report).

The deal goes back to January. It runs to June 30, 2012, and it’s a lump sum deal, but the rate isn’t being disclosed,” PRS For Music’s online and broadcast MD Andrew Shaw told paidContent:UK.

YouTube’s original, 2007 PRS deal – the first it struck anywhere with a royalty collector – also involved an advance payment, which also wasn’t disclosed.

From July, PRS halved its on-demand streaming music rate from £0.0022 to £0.00085 per track in response to a clamour from services like, We7 and YouTube itself. Isn’t YouTube just paying this standard, Online Music License rate, which other services have to pay quarterly? It may be equivalent; Shaw: “We’re comfortable the arrangement we’ve come to with them is consistent with our other terms.”

The deal covers official music videos, songs used in general entertainment videos and those used in user-generated vids. “At the time of the original deal, the vast majority of their content was user-generated,” Shaw said. “YouTube originally told us that their intention was to get more official videos and that’s exactly what they’ve done.”

What has been the effect of PRS’ online rate reduction? “We’re encouraged by the response from the licensee community – we’re in active discussions with a number of other and new licensees, but the real test of whether the decision we made was correct will probably not be made for another year or two….

We took the opportunity to create an industry; that isn’t going to happen overnight. We knew existing services would welcome it with open arms, that goes without saying. The real test is whether it brings in new license users.”

Shaw said PRS is collecting Spotify’s royalties from across Europe, including the UK. He wouldn’t detail those terms, but said they are “comparable” with PRS’ other rates.