YouTube and the music industry don't have the best relationship. The former's created business opportunities for the latter, but major record labels have blamed YouTube for declining sales and profits. That's made it difficult for the two to work together, needless to say, but they're willing to set aside their differences for mutual gain: According to Bloomberg, Universal Music Group and Sony Music Entertainment signed a new deal with YouTube.
The reason? Google reportedly wants to merge its music services, YouTube Red and Google Play Music, into one that'll launch in 2018. But to do that, it needs to work out new terms with labels. The video juggernaut was able to ink a contract with Warner Music Group back in May of this year, but Universal Music Group and Sony Music Entertainment held out until now.
Part of the reason was YouTube's ongoing battle with copyright infringement. The music industry wasn't happy about users who upload videos that contain unlicensed songs, but with 300 hours of video uploaded to the service every minute, it wasn't easy to police.
To alleviate this, YouTube created an algorithm it uses to scan the contents of videos — Content ID. It gives music studios the ability to file claims on copyrighted content and either (1) pull down the video or (2) place ads on it so they can get paid for the content they own. This solution appeased for both sides for a while, but record labels felt they weren't being fairly compensated.
Now, though, it seems they've seen Google's way.
Source: Bloomberg
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