YouTube Could Lose Music from Adele, Radiohead, Other Indie Artists

Source: http://www.flickr.com/photos/suckamc/

A group representing independent artists is lodging a formal complaint against YouTube with the European Commission, alleging that the Google (NASDAQ:GOOG)(NASDAQ:GOOGL) site has used strong-arm tactics to intimidate smaller record labels into inferior contracts and cheated them out of revenue they deserve, U.K.-based newspaper The Guardian reports. The complaint comes as the video-sharing site prepares to launch a music streaming service similar to Spotify. That service could go without music from Adele, the Arctic Monkeys, and Radiohead should the conflict not be resolved.

The Worldwide Independent Network represents independent artists and record labels in order to help them collectively bargain for fair terms alongside major labels including Sony Music, Universal, and Warner Music. The organization said that it has received numerous complaints about YouTube’s bargaining tactics from small record labels, who have been threatened with having their music videos blocked should they refuse YouTube’s terms.

Alison Wenham, chief executive of WIN, told The Guardian: “We have been hearing from many companies across the world who are expressing fear, displeasure, outrage and confusion at the phone calls, letters and bullying they seem to be receiving from YouTube employees.”

YouTube responded in a statement to the newspaper, saying that the service “provides a global platform for artists to connect with fans and generate revenue for their music.” The spokesman added: “We have successful deals in place with hundreds of independent and major labels around the world, however we don’t comment on ongoing negotiations.”

YouTube is well known for its rigid terms that see Google taking a 45 percent cut of any video’s ad revenue, something that has frustrated the service’s most popular content makers. Of course, independent artists and record labels have less room to lose cash to YouTube than those with more financial weight behind them.

Bargaining collectively and appealing to the EU could help WIN see results even against a behemoth like Google. By pooling together all the independent labels, YouTube’s potential streaming service stands to lose out on a lot of popular music, something that would be hugely detrimental in its ability to compete with an established service like Spotify. Franz Ferdinand, Vampire Weekend, M.I.A., the White Stripes, the Kills, and Queens of the Stone Age, among many other popular artists, would be absent from the service should WIN refuse to lend its music to YouTube.

Musician Billy Bragg told The Guardian that YouTube is “shooting itself in the foot” as it seeks to make its own streaming service by refusing to cooperate with independent labels. “They are in danger of launching a streaming service that lacks the innovative and cutting edge sounds that independent artists bring. Would music fans be willing to pay for such an inferior product? I don’t think so,” Bragg said.

The New York Post reported in March that YouTube’s music streaming service would cost $10 for an ad-free version and is looking to launch sometime this summer, citing industry sources, though it is hard to imagine such a service competing with Spotify if it doesn’t offer the artists represented by WIN.

More From Wall St. Cheat Sheet:

Follow Jacqueline on Twitter @Jacqui_WSCS