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

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

YouTube is now instituting a substantial change in the way 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 of time. Unresolved funds will be distributed to music publishers according their revenue market share on the platform.

The payouts will be issued according to a well-defined schedule. According to a detailed payout schedule viewed by DMN, the first payout will involve unresolved royalties held in escrow between the dates of 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. Other payout cycles will follow, with December 1st payouts in ongoing years, according to the detailed schedule.

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 publishers total revenues for the conflict period is divided by overall revenues paid to all publishers during the period. Importantly, publishers who do not sign the updated agreement will not be included in the market share calculation.

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

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

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

At that point, 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 certain time period.

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

That would exclude PROs like ASCAP, BMI, SESAC, and GMR from the payouts, though 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, though one source noted that disputes are far less common on the recorded music side of the equation.

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