Academic journal article MEIEA Journal

Content ID as a Solution to Address the Value Gap

Academic journal article MEIEA Journal

Content ID as a Solution to Address the Value Gap

Article excerpt


The International Federation of the Phonographic Industry (hereafter IFPI) has described the value gap as "the biggest threat to the future sustainability of the music industry," making it "the industry's single highest legislative priority" (IFPI 2017, 24-25). IFPI is, however, not the only trade association to put the value gap high on its policy agenda. Albeit in some cases using different terminology,1 the International Confederation of Societies of Authors and Composers (hereafter CISAC), the Independent Music Companies Association (hereafter IMPALA), the International Confederation of Music Publishers (hereafter ICMP) or, at domestic level, the Recording Industry Association of America (hereafter RIAA), to name a few, all have strategies in place in order to "bridge the value gap."

The political debate has become particularly intense in Europe since September 2016, when the European Commission presented its draft Directive on Copyright in the Digital Single Market.2 The bill covers a wide variety of subjects and was presented together with other proposals in what seemed to be the most ambitious copyright package in many years.

One of the most important aspects of the draft directive is its attempt to bring some clarity as regards the role played by user-uploaded content (hereafter UUC) platforms in the dissemination of copyright protected content. If adopted, it would therefore constitute the first piece of legislation in the world to address the value gap.

One of the most debated aspects of the bill is the obligation it imposes on UUC platforms to introduce content recognition technologies to help manage the copyright protected content that is made available. However, this type of technology has already been implemented by some UUC platforms, most notably YouTube, and, albeit helpful, has not completely solved the problem. This raises questions as regards the effectiveness of said technologies, the way they are used by rights holders, and ultimately asks if the obligation to introduce them is enough to address the value gap. But what exactly is the value gap?

The Value Gap

According to the IFPI, "The value gap describes the growing mismatch between the value that some digital platforms, in particular user upload services, such as YouTube, extract from music and the revenue returned to the music community-those who are creating and investing in music" (2018, 26). In other words, music rights holders consider that the money paid by UUC platforms for the use of music does not reflect the true value of music.

Calculating the Value Gap

The question now is if we can actually quantify that mismatch, and while this is not easy, we can look at different sources. The IFPI itself provides some information (see Figure 1).

The IFPI also adds that the estimated annual revenue per user is US$20 in Spotify and less than $1.00 in YouTube. Moreover, it reports that video streaming makes up more than half of on-demand streaming time, YouTube alone accounting for 46% of that time (2018, 27).

On the other hand, Information is Beautiful compares the average artist revenue per play of the major music streaming services, coming to the following results (Table 1). However, calculating the value gap is not as simple as comparing YouTube payouts to those of other digital services, let alone other sources of revenue. First of all, because value gap claims are based on YouTube's ad-based service, not on its newly created YouTube Music,3 whereas Spotify, Apple Music, Deezer, and other digital platforms generate most of their income, if not all, from subscriptions, which is a different business.

Some therefore argue that YouTube should be compared only to the ad-supported tier of those services. Yet, even if that comparison is made, YouTube seems to be paying less than Spotify (Table 2).

Liebowitz (2018) suggests further analysis. First, he looks at the percentage paid out by YouTube compared to the ad-supported tiers of music streaming services. …

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