YouTube confirms music service, upsetting some indie partners in the process

YouTube (S GOOG) officially confirmed Tuesday that it is going to launch a paid music subscription tier to its service. However, the service may come with some collateral damage: YouTube is going to start blocking music videos from five percent of its label partners. Affected are indie labels that haven’t agreed to YouTube’s licensing terms, according to a Financial Times report.

The paper quoted YouTube content head Robert Kyncl saying that official music videos from labels that haven’t reached an agreement with YouTube will disappear from the service “in a matter of days.”  YouTube already has agreements with all the major labels and some indies in place, but could take down videos from artists like Adele and the Arctic Monkeys, according to the Times.

However, it seems like these take-downs wouldn’t affect all of these artist’s videos. Vevo told Techcrunch that its Adele music videos will remain available, and the same will presumably be true for the Arctic Monkeys as well. Adding to the confusion are regional licensing disparities. A band may be on an indie label in the U.K., but distribute its music through a major label abroad, in which case U.S. users would continue to have access to these videos.

Also not affected are the countless lip dubs, parodies and vacation videos that have been borrowing music from indie and major label artists alike. User-generated content will continue to be available on the site, and musicians will continue to be able to monetize these videos through ads, regardless of whether they have signed on for YouTube’s music service or not.

Asked about the service and this dispute, a YouTube spokesperson sent me the following statement:

“Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry. We’re adding subscription-based features for music on YouTube with this in mind — to bring our music partners new revenue streams in addition to the hundreds of millions of dollars YouTube already generates for them each year. We are excited that hundreds of major and independent labels are already partnering with us.”

Is YouTube evil — or just diligent?

Still, the takedowns won’t exactly help YouTube with its image, even if they only affect a small number of songs in a few countries. Which makes you wonder: why is the music service doing this? One could obviously make the case that YouTube is trying to strong-arm labels that are holding out for a better deal, threatening to cut them off from ad revenue if they don’t agree to be part of the paid service.

However, there’s also a flip side to this: One could also argue that YouTube just wants to avoid becoming Hulu. The TV catch-up service offers both free, ad-supported and subscription-only content, and subscribers to its paid Hulu Plus tier regularly run into confusing situations where a TV show episode may be available for free on the web, but not through the Hulu Plus app on mobile and connected devices.

The same could happen if YouTube was going to launch a paid service that coexists with free music videos with differing rights. YouTube hasn’t said yet exactly what its service is going to look like, but one of the features likely included is offline playback. Paying subscribers may run into an issue where they’re able to download one song, but not another, or bypass ads on one video, but not another. By blocking these disputed songs altogether, YouTube may be able to provide a more consistent experience for its paying users — albeit at a notable cost for everyone else.