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Exclusive: YouTube Issues Major Rule Change for Copyright Royalty Disputes — With a Possible Windfall for Music Publishers

YouTube Music CEO Lyor Cohen

YouTube Music CEO Lyor Cohen

YouTube is now changing its rules surrounding copyright royalty disputes, according to details shared with Digital Music News. The changes could generate a significant windfall for established music publishers.

YouTube is instituting a substantial change in how it handles disputed copyrights and royalties, according to agreements shared this week with Digital Music News.

The changes will effectively shuttle disputed royalties to established music publishers if conflicts remain unresolved after a certain period. Unresolved funds will be distributed to music publishers according to their revenue market share on the platform.

The payouts will be issued according to a well-defined schedule. According to a detailed payout schedule reviewed by DMN, the first payout will involve unresolved royalties held in escrow between January 1st, 2012, and December 31st, 2020, identified by YouTube as the ‘Initial Conflicts Period.’

Those first payouts will be issued on December 1st, 2024, after a ‘Conflicts Threshold Assessment Date’ of May 31st, 2024.

That will be followed by a second payout on December 1st, 2025, for the ‘Second Conflicts Period’ of January 1st, 2021, through December 31st, 2021. According to the detailed schedule, other payout cycles will follow, with December 1st payouts in ongoing years.

It’s difficult to estimate the total amount of held royalties in question, though one source who works closely with the platform estimated that the initial tranche is in the eight-figure range.

In one agreement, YouTube clearly outlines how market share percentages will be calculated. Specifically, a publisher’s total revenues for the conflict period are divided by overall revenues paid to all publishers during the period. Importantly, the market share calculation will not include publishers who do not sign the updated agreement.

The changes and accompanying YouTube agreements were shared on the condition of anonymity.

Previously, YouTube held disputed amounts in escrow for lengthy and undefined periods, with unresolved conflicts potentially remaining unpaid indefinitely.

Starting in 2016, YouTube updated its Content ID copyright disputes policy by allowing contested videos to remain available to users. Under that updated policy, YouTube pays the accrued royalties to the appropriate party once a conflict is resolved.

In that year, YouTube noted that less than 1% of videos fell into dispute, though it’s unclear how many disputes remain unresolved for extended periods of time. Also unclear is how many disputes are never resolved, though this redistribution plan would effectively terminate the dispute process after a specific time period.

In the agreements, YouTube specifically excludes public performance royalties while focusing exclusively on ‘reproduction and distribution.’

That would exclude PROs like ASCAP, BMI, SESAC, and GMR from the payouts. However, Digital Music News has learned that separate royalty agreements with performance rights organizations would make conflict payouts unnecessary. Specifically, payouts based more broadly on total advertising and subscription revenues theoretically remove the need to haggle over specific copyright claims.

Also missing from the agreements are recording owners, including the recording divisions of major labels. One possibility is that separate agreements exist or are underway for recording owners. However, one source noted that disputes are far less common on the recorded music side.

Recording ownership tends to involve fewer owners, whereas publishing copyrights often involve multiple songwriters and publishers. That dramatically increases the likelihood of a dispute and complicates the resolution process.

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