Why we wrote this guide
YouTube is enormous! The network spans all corners of the earth, is generating healthy revenues, and has more people listening to music on it than all other music services combined…and it’s growing exponentially!
Given the scale and multitude of relationships that exist between rightsholders, data distributors, collection organizations, and creators it is obviously very complex. This unique mixture creates incredible opportunities and challenges for all.
To take advantage of the full power of YouTube one needs a strong foundational understanding of how the music business and YouTube work in addition to the small, yet important, details.
That is why we wrote this guide – to empower one with the building blocks to stay informed.
Who is this guide for
This guide is written for the following:
- Writers, composers, and artists interested in a more elaborate understanding of how their musical works generate exposure and revenue.
- Music Publishers and Record Labels who are curious about how to include YouTube, in a broader effort to fully exploit the copyrights they control.
- YouTube Creators eager to gain a deeper understanding on how music can be included in their videos and channels.
- Students and/or artists who are just starting to learn how YouTube might play a role in their music business.
- Attorneys, managers, staff, and the like that work ancillary to the music business.
Ultimately our goal is for the reader of this guide is to walk away feeling confident in their understanding of how the moving parts of YouTube and the music business work together.
It is recommended that the reader takes time to fully consume all of the information offered in order to take full advantage of all that YouTube has to offer.
Read time – ~ 1 hour
One will also find links to tools and additional resources that can be utilized to further one’s education and get the most from the network.
Finally, as questions and ideas arise, please do not hesitate to reach out to Exploration clarification. We are here to help.
Table of Contents
- History of YouTube
- Music Industry Basics
- How YouTube Works
- Managing Metadata
- VEVO and YouTube
- YouTube Tools
- YouTube Law Cases
History of YouTube
YouTube was created in 2005 by Chad Hurley, Steven Chen, and Jawed Karim, as a way to easily view and share video via the internet.
It experienced explosive growth and was then acquired by Google in 2006 for $1.6 billion.
In 2007, Content ID was launched on a limited basis to programmatically identify videos.
Also in 2007, Viacom and other content providers sued YouTube alleging that the company should be held liable for copyright infringement for hosting 1,000’s uploaded by users of infringing videos between 2005 and 2008. The lawsuit sought more than $1 billion in damages.
They settled out of court. A resulting provision stated Google needed to provide a tool for rightsholders that was “efficient” and “effective” for them to manage their rights.
In 2011, Google acquired the company RightsFlow. RightsFlow had amassed an enormous catalog and developed software to aid in the identification, reporting, and payment of royalties associated specifically with music publishing licenses. Google took advantage of RightsFlow’s effort and rolled the technology and data into what would become Content ID Content Management System.
On January 1, 2012, the Content Management System (CMS) was launched and made available to select rightsholders.
Using the tools, rightsholders started to add and edit asset metadata on copyrights they controlled. Initially, rightsholders often exercised the policy to block or takedown any content that contained their copyrights. However, as the opportunity to monetize and generate exposure through User Generated Content (UGC) became a viable options, the trend has changed to track and monetize. Several thousand music publishers, record labels, PROs, and administrators now contribute to the CMS worldwide.
YouTube makes money by selling advertising that is displayed in association with uploaded videos and via subscriptions to viewers for ad free content, offline access, and exclusive content through YouTube RED.
AdSense was originally created as the advertising network to serve Google.com. It has since become the world’s most sophisticated advertising sales platform, providing advertisers with incredible control over their messaging and analytics. YouTube’s connection with AdSense has presented a unique opportunity to advertisers by offering them access to advertise on YouTube videos.
YouTube ultimately splits its income from advertising and subscriptions with rightsholders. To date they have paid rightsholders in excess of $3 billion.
YouTube has since greatly increased the scope of their offerings. They’ve increased the capability and capacity of Content ID, added access to new tools, and built recording facilities. And they continue to forge strategic partnerships and create new ways to monetize content across the globe.
Music Industry Basics
Before moving too deeply into how YouTube and rightsholders work together, it is important to have at least a basic understanding of the relevant parts of the music business.
It all starts with copyright and for the purposes of this guide we will be referencing the copyright law of the United States.
Copyright law protects and allows those that have created and/or own musical works to receive attribution and remuneration (money) for the uses of these works. This is important, because rightful ownership of a particular musical work is foundational to how all of the interested parties ultimately work together. Relative to YouTube and the music business, there are 3 types of copyrights that are important to consider:
Composition – The song. A composition is comprised of the words, notes, melody, and arrangement of a particular musical work. Compositions are owned by a music publisher. A writer or composer writes a song and then an artist or band performs it (sometimes the composer and artist are the same person, hence singer-songwriter). Other people may interpret a song in their own way after the initial performance. This is referred to as a cover. The same composition may be used in multiple different sound recordings.
Sound Recording – The recorded audio. A sound recording is the actual music that has been created as an interpretation of a composition. A sound recording is owned by a record label. It may include vocals, drums, strings, horns, electronic sounds, or any other types of audio arranged into a single master recording. Master recordings originally got their name from the days of records being produced. The recorded version would have been the master, thus making all copies the slaves. A sound recording may be embedded in multiple different videos, and will have only one composition embedded in it.
Music Video – The audio-video. A music video is video that has been synced to audio, for the purpose of interpreting the music in a visual medium. A music video is most often owned by the same record label that owns the sound recording. It might be a high budget choreographed production or something as simple as a recording of a live performance. Note the usage of the word sync, as we will see this again later. In its simplest terms, this is a reference to when audio is synced to a visual component, such as in a music video, tv, film, game, or sports broadcast…but let’s not get ahead of ourselves. When discussing a music video here, we are not talking about any random video that might contain a particular musical work, only official music videos. A music video will have a sound recording embedded in it and the sound recording will have a composition embedded in it.
In summary, a composition is the written song and it is owned by a music publisher. A sound recording is the actual recorded audio, which has an embedded composition, and is owned by a record label. Finally, a music video is visual imagery synced with a sound recording and is usually owned by the record label as well. Each are unique and distinct copyrights.
Copyright law recognizes certain rights exclusive to the creators and owners of a song. These include the rights:
- To reproduce in copies
- To prepare derivative works
- To distribute copies
- To perform the work publicly
- To display the work publicly
- For YouTube, there are primarily two of these rights at work, which require that one obtain licenses. They are the right to prepare derivative works, which relates to a sync license, and the right to perform publicly, which relates to a performance license.
A performance license is one that dictates how music publishers are paid when works that contain their compositions are performed publicly. This license type was originally created to insure that composers were compensated when their written songs were played during concerts and other live performances before records, cds, and the internet existed. Radio airplay in the United States and music playing publicly, say for instance on the speakers at the local restaurant or mall, are both examples of a public performance.
Performing Rights Organizations or PROs, whom in the United States are ASCAP, BMI, & SESAC, collect royalties from public performance.
YouTube successfully negotiated a deal with the PROs for use of their repertoire in the form of a blanket deal. YouTube pays the PROs for use of their entire catalog, that is then distributed to all writer/publishers of songs the PRO controls.
Performance licenses are mandated by the government for ASCAP and BMI. Performance licenses are negotiated independently by SESAC. The revenue generated is usually referred to and categorized as a performance royalty.
Performance licenses and YouTube are related to music publishing. In order for YouTube to allow users to upload videos containing music, they obtained from performance license from the PROs – ASCAP, SESAC and BMI. Performance licenses are needed any time a song is played publicly (ie – radio, live performance, broadcast, and online video).
A sync license is one that dictates how music publishers and record labels are paid as a result of their music being featured with a visual component. This may include film, TV, games, broadcasts, commercials, and web video. Sync licenses are typically individually negotiated and paid directly to music publishers, record labels, or their representatives. The revenue generated is usually referred to and categorized as a sync fee or sync royalty.
Relative to YouTube, sync royalties are generated via advertising. They are the lion share of the monies to be collected on the network. The royalty amount is directly tied to the viewing analytics within the YouTube system. It’s important to note that not all views generate the same amount of money, but we’ll get into this in more detail later.
Music synced with any visual media demands two sync licenses, one for the publishing and one for the sound recording. Permission from both the music publisher and record label are required in order to use someone else’s sound recording in their video. If a YouTube user uploads a cover, live performance or any other video where only the composition is used, then only a sync license from the publisher is required.
YouTube does not facilitate or negotiate sync licenses on behalf of it’s users. Instead, publishers and sound recording owners have the option to make a claim on any video that is uploaded that contains their copyrighted works, if permission has not already been granted.
Music Video License
A music video license is one that dictates how record labels are paid for the use of their official music videos.
They work in a similar fashion to sound recording licenses.
International – Ex-United States
In all markets outside the United States, both of the music publishing royalties, performance and sync, are bundled together and paid via the local PRO and then on to the music publisher or sub-publisher. There is not currently an opportunity for foreign music publishers to work directly with YouTube, only through their respective local PRO.
Record labels are able to collect directly from YouTube or via their distributor for worldwide exploitation.
Here’s a quick summary:
A composition is the written song and it is owned by a music publisher. It is embedded in a sound recording. Multiple different sound recordings can contain the same composition. It generates a performance and sync royalty on YouTube. In the United States the performance royalty is paid to the PRO of the writer/publisher and the sync royalty is paid direct to the music publisher or their representative. In all territories outside the United States both royalties are bundled together and paid via the local PRO and on to the sub-publisher.
A sound recording is the actual recorded audio and is owned by a record label. A composition is embedded in a sound recording and a sound recording is embedded in a video. Multiple different videos can contain the same sound recording. The money it generates is combination of performance and sync royalties. Record labels are paid directly from YouTube.
A music video is a visual representation of a sound recording. It has the sound recording embedded in it and typically owned by the same record label that owns the sound recording.
How YouTube Works
Content Management System (CMS)
The YouTube Content Management System (CMS) affords rightsholders an opportunity to manage the copyrights they control. It is comprised of Content ID, Video Manager, Channel Manager, AdSense, Analytics, and Content Delivery modules.
The CMS is a complicated and powerful tool, so we are going to start with its most basic parts and then bring it all together.
An asset on YouTube is a container of intellectual property containing all of that copyright’s respective metadata. There are many types of assets in the CMS. Relative to the music business there are two primary types, composition and sound recording.
A composition is comprised of the written words, lyrics, and melody of a song. It is usually owned and managed, partially or in whole, by a music publisher. An indie composer, arranger, or artist may act as their own music publisher for the purposes of collecting their royalties.
Required metadata for compositions includes writers, publishers, ownership splits, territory of control, and related ISRC or related asset ID.
While not required within Content ID, is recommended to include the International Song Works Code (ISWC) associated with a particular composition. ISWC’s are issued by ASCAP in the United States.
Compositions are connected to sound recordings via a related International Sound Recording Code (ISRC). This connection denotes a composition being embedded in a sound recording. In order for a composition to make money or generate analytics via the CMS it must be connected or embedded in a sound recording.
Music publishers typically have territorial specific rights to collect royalties. They defer collection outside their jurisdiction to sub-publishers via local PROs.
A sound recording is the actual recording of a song. It is owned by a record label. Indie artists and bands typically act as their own record label for the purposes of collecting their royalties.
In the CMS a sound recording has a corresponding reference file, which is a unique digital fingerprint. It is used to programmatically identify video that might contain that sound recording.
Required metadata for sound recordings includes Title, Artist, Record Label, Territory, and ISRC.
An International Sound Recording Code (ISRC) is assigned to a sound recording when it is being prepared for distribution and is used to identify it on YouTube and beyond.
Record labels typically hold exclusive worldwide rights to sound recordings allowing them to directly collect all royalties.
ISWC and ISRC in the Music Business
International Song Works Codes (ISWC) used to identify compositions and International Song Recording Codes (ISRC) used to identify sound recordings are not exclusive to YouTube. They were created decades ago to identify compositions and sound recordings across all aspects of the music business.
Functions of Content ID
The primary matching algorithm of Content ID utilizes a digital fingerprinting system that identifies videos that may contain copyrighted work. All uploaded videos to YouTube are compared against its library of reference files. Upon a successful match, the system automatically makes an ownership claim and applies a use policy to the matched video.
Suggested claims are made available within Content ID to rightsholders when it has been determined that there is a high likelihood that the video contains copyrighted material, but isn’t 100% certain. These claims are presented in a queue that must be reviewed manually on a day to day basis.
If a video owner who has had a claim made on their video believes it has been done so in error or illegitimately, they can dispute the claim. The rights holder is made aware of the dispute in the CMS console. They then have 30 days to either remove the claim or uphold it.
Content ID makes available the ability to add, edit, and manipulate asset ownership and metadata. Asset metadata includes writers, artists, publishers, record labels, unique identifying codes, and reference files. Composition, sound recording, music video, film, TV, game, sports, broadcast, and other web video assets all contain unique asset specific metadata.
YouTube Ownership Conflicts
Conflicts within YouTube come as a result of multiple CMS partners placing more than 100% ownership on a single asset.
When in conflict, an asset will continue to generate revenue, however royalties will not be paid out until the conflict is resolved. When an asset goes into conflict, the owners are made aware via the CMS console. They are encouraged to connect with each other to achieve resolution.
YouTube Use Policy Control
Upon claiming ownership of an asset with Content ID, YouTube allows four policy options. These are listed in order from least to most stringent. This is important. When multiple parties have different use policies applied to a particular asset, the most stringent policy will take precedence.
Monetize: Opt to have ads placed before, during, after, and adjacent to the video in effort to make money from its viewing. Track: Opt to prevent ads from appearing in association with the video, however will retain the ability to preview viewing analytics. This policy will be effect when no policy is chosen by an owner.
Block: Opt to block a particular infringing video, such that it is not viewable on the network. It’s sort of a slap on the wrist, effectively saying, “Hey look, don’t use our stuff!”
Takedown: This is an official copyright strike and constitutes a legal action to remove the video, as a result of it containing copyrighted work. A channel owner will have their channel banned after receiving takedown notices on 3 videos. Three strikes and you’re out!
In order to monetize content on YouTube one must signup for and connect to AdSense, Google’s advertising platform. Connection of YouTube and AdSense is achieved within the CMS.
Royalties are paid monthly via direct deposit. Extremely granular analytics are also provided.
Google splits royalty payments at source, meaning that publishing royalties are paid directly to publishers and their representatives, while sound recording royalties are paid directly to record labels.
Additional Interested Parties
There are some other entities involved with YouTube that aren’t necessarily the owners of a copyright, rather are managers or representatives.
Multi Channel Network
A Multi Channel Network or MCN, works with channel owners to build and grow their channels. They often provide tools to help creators easily produce content that can be marketed in unique ways.
An MCN may have preferential relationships with select advertisers, allowing them to keep the small margin between what is collected and paid to the creator and YouTube.
By design, MCN’s aggregate many channels and have the ability to cross promote each of their creators’ content.
Aggregators are companies that manage, monitor, and audit assets and videos for particular right’s holders. Rightsholders typically call upon aggregators once they have reached a point in their career that their media is be infringed upon and shared across YouTube. Aggregators help with data management, application of use policy, claiming, conflict resolution and analytics analysis.
Performing Rights Organization
Performing Rights Organizations or PROs administer the performance rights associated with copyright law, particularly collection of royalties between music publishers/songwriters and parties who wish to use copyrighted works publicly.
In the United States, there are three PROs
SESAC – Society of European Stage Authors and Composers
ASCAP – American Society of Composers, Authors and Publishers
BMI – Broadcast Music, Inc.
A composition is uniquely identified via an ISWC or International Song Works Code. PROs calculate performance royalties as a function of the views a video accumulates that is associated with a particular ISWC.
In the United States, YouTube has performance licenses with each of the PROs and pays out only the performance royalty associated with views on YouTube. This is separate from the sync royalty or fee.
Currently, in every territory outside the United States, a music publisher does not have an opportunity to work directly with YouTube and must collect royalties via their local PRO. Furthermore, in territories outside the United States, both performance and sync royalties are bundled and paid together.
Ex-US PROs are also responsible for paying royalties that are generated as a result of viewing from that particular country, regardless of where the rightsholder resides.
Here’s an example: The viewing of the Jailhouse Rock video in France generates some money owed to the music publisher and record label. The music publisher will be paid by their sub-publisher in France via the French PRO, SACEM. The record label will be paid directly from YouTube.
Music metadata is all of the detailed information that identifies a particular piece of intellectual property. For a list of the minimum data needed for proper YouTube functionality, please reference the sample Catalog Metadata Template.
The most valuable thing a music publisher and record label can have is well organized catalog metadata. The more clean metadata the better, if one wants to get paid.
With a clean and thorough catalog one can get the most from YouTube. It will also allow one to maximize efforts in all music industry aspects including physical sales, streaming services, touring, and radio airplay.
Metadata Specific to YouTube
An asset on YouTube is a container of intellectual property. There are two primary types of music assets, composition and sound recording, containing all of their respective metadata.
Composition asset - Metadata required for composition assets include, but are not limited to:
- Title – required
- Writer(s) – required
- Publisher – required
- Percentage control – required
- Territories of Control – required
- HFA Song Code
- Related ISRC Code
- Custom ID
Sound recording asset - Metadata required for sound recording assets include, but are not limited to:
- Title – required
- Artist(s) – required
- Record Label – required
- Territories of Control – required
- ISRC Code – required
- Custom ID
Because one’s music has global exposure outside of YouTube there are a few more data points to consider.
Where your sound recording is released
Type of genre of the sound recording
Asset Labels – Labels help one organize assets into custom categories. Music publishers and record labels often use labels to divide their catalog by writer, sub-catalog, sub-publisher, etc. Asset labels are free form and as many as needed may be added to an asset.
Catalog metadata can be found via the US Copyright Office, PROs, Harry Fox Agency, Music Reports, Sound Echange, other streaming services and you guessed it…from within the YouTube CMS. Other rightsholders may have already added a large portion of music metadata.
A note on YouTube Metadata
RightsFlow amassed the initial metadata database and created the technology that ultimately became the YouTube CMS. Then the NMPA (National Music Publishers Association) and Harry Fox Agency, in their settlement deal with YouTube, added to their databases to YouTube, in one of the first large data dumps. Many parties have since added their own metadata to the YouTube data set.
YouTube now has the most robust and largest collection of music rights information that exists.
With all of this in mind, the data contained and accessible within the CMS is not perfect and contains errors. The good news that rightsholders have the powerful ability to edit and confirm the data pertaining to the copyrights they control.
Metadata can be edited and delivered to YouTube a few ways.
An individual asset’s metadata can be edited via the CMS.
Asset metadata may be edited and delivered in bulk to YouTube via the browser uploader located within the CMS, via the YouTube ingest spreadsheet or via Dropbox.
Select CMS partners are granted API (application programing Interface) access to build proprietary software that interacts with the YouTube system, to manage large amounts of metadata.
VEVO and YouTube
What is VEVO?
Vevo is a multichannel music video network that started in 2009. It is a joint venture between Universal, Sony, Google and Abu Dhabi Media. VEVO serves official music videos exclusively, to attract premium advertising. Some live performance and exclusive content featured, but rarely. There is no User Generated Content (UGC) on VEVO.
VEVO uses all of the same technology as YouTube, including the ad sales platform, but is a separate company.
How to Get a VEVO Channel
The general public cannot sign up for channels like they do on YouTube. To get a VEVO channel one must be considered a record label or work with one. Some aggregators and third party services can help one get a VEVO channel.
Relationship with YouTube
VEVO videos and channels are controlled via VEVO. However, they display the same and are mirrored on YouTube.
All royalties are paid to record labels for viewership on VEVO. Record labels have the obligation to report to and pay the music publishers who own the underlying compositions.
YouTube Creator Academy – Learn how to use YouTube It is recommended that anyone working in music today, whether you’re a music publisher, record label, artist, composer, or manager take the time and go through the Creator Academy. It’s a free online resource. It’s specific to YouTube but the lessons learned can be used throughout one’s music business.
YouTube Playbook for Music - The YouTube Playbook for Music is a downloadable PDF guide.
YouTube Artists - YouTube Artists provides extremely granular analytics specific to artists and bands. One can understand fan what/when/where of music consumption. This is great for planning a tour.
YouTube Analytics -
YouTube Analytics are accessed within the CMS or should be provided in raw form from YouTube through your monthly reports.
Viewer metrics and revenue is reported monthly.
The data and tools may also be utilized to mould and sculpt one’s music business. It can be used to nurture one’s fan base, plan a tour, or sell specific merchandise.
AdSense - Google’s advertising network for monetizing content on YouTube.
YouTube Space - YouTube has built world class recording studios in several major metros across the globe. They contain full sets, professional equipment, and have enjoy the attendance of many creators that are keen to collaborate.
One’s channel must reach a subscriber threshold in order to be invited to take the Unlock the Space course and subsequently access the facilities for free. They also host tours quite frequently to the general public.
Content ID Application - YouTube Partner application for rightsholders.
YouTube Law Cases
Viacom International Inc. v. YouTube, Inc.
June 23, 2010
No. 07 Civ. 2103, 2010 WL 2532404 (S.D.N.Y 2010)
Google’s motion for summary judgement was granted on the grounds that the Digital Millennium Copyright Act’s “safe harbor” provisions shielded Google from Viacom’s copyright infringement claims, but was later overturned in part, and the case remains pending.
Lenz v. Universal Music Corp.
September 14, 2015
801 F.3d 1126 (2015) – affirming 572 F. Supp. 2d 1150 (2007)
Copyright holders must consider fair use in good faith before issuing takedown notices for content posted on the internet.