Very insightful reporting from Rob Copeland at WSJ on Google’s revenue that culls out YouTube’s share of Google’s revenue–and boy are we getting hosed.
Alphabet said YouTube exceeded $15 billion in annual revenue in 2019. That would be on the lower end of projections for the video business, which has been the subject of educated guesses for years, and suggests that YouTube pulls in less than $8 a year from each of its 2 billion users. On a call with analysts, Mr. Pichai said he believes there is “significantly more room” to make money off YouTube’s users.
Given that YouTube is heavily dependent on music videos, it’s hard to explain how YouTube is dead last in royalty rates:
And remember, according to BrandWatch, “[a]s of Jan 2020, the 93% of the most-watched videos [on YouTube] were music videos” and according to IFPI’s Music Consumer Insight Report, 47% of time spent by fans listening to on-demand music is on YouTube. So it’s hard to explain why YouTube royalties are so low–and I would actually say that YouTube royalties are actually negative when you take into account the total cost of dealing with YouTube on DMCA, Content Management System and Content ID.
If you can afford it–remember the A2IM and Future of Music Coalition study that showed the main reason that independent’s don’t pursue their rights is because they can’t afford to. Not a big leap that they definitely can’t afford to challenge Google.
It’s all a little hard to understand. Even at 1% of YouTube revenue for publishing, comparable to the low public performance royalty at radio (distorted by the radio oligopoly), the songwriters alone should divide up $150,000,000–in a comparable deal. Artists should be grossing well over that in line with historical ratios. Given the outsized impact of music on YouTube’s revenue, shouldn’t the total industry-wide royalty payment be vastly more than $150,000,000? Why do we get hosed so badly on YouTube revenues? My bet is that it’s not at the negotiator level. Those are some of the most talented negotiators in the world.
But they’re on a leash and Google knows it. It’s always seemed to be a situation where eventually someone upstairs calls and says, thanks for the great work on YouTube negotiation–we’ll take it from here. And you see the result. Hard to explain any other way.
But it may help to explain why this person is laughing at us.
“This planned violation of privacy by Spotify is a huge reason to stick with@Applefor podcasts. Ads in podcasts are fine with me, and I’ve even bought products advertised on some of my favorite shows. Ads based on vacuuming up my private info aren’t OK.”
This planned violation of privacy by Spotify is a huge reason to stick with @Apple for podcasts. Ads in podcasts are fine with me, and I’ve even bought products advertised on some of my favorite shows. Ads based on vacuuming up my private info aren’t OK. https://t.co/fKTHnULyzq
His Master had told him to call for help should a Wolf attack the flock, and the Villagers would drive it away. So now, though he had not seen anything that even looked like a Wolf, he ran toward the village shouting at the top of his voice, “Wolf! Wolf!”
As he expected, the Villagers who heard the cry dropped their work and ran in great excitement to the pasture. But when they got there they found the Boy doubled up with laughter at the trick he had played on them.
The Boy Who Cried Wolf, Aesop’s Fables No. 210
Quick–how many times have you heard Google try to beat back challenges to their bad behavior with the old “Don’t Break the Internet” meme? We’ve seen it many times, of course, but repetition doesn’t make it right and it definitely doesn’t make it true.
If there’s legislation, a lawsuit or some policy action that Google finds a commercial threat to their vast riches, especially including ill-gotten gains, it’s only a matter of time until they summon the academic and NGO chorus of Cassandras to bemoan, wail and rend garments over the single most important existential threat to humanity since the plagues of Egypt–breaking the Internet.
Breaking the Internet takes a few different forms including crushing innovation (or in the Googleplex, stealing everything that they can get away with). And yet after a decade or more of this bunk, the Internet still trundles on, some how squeaking to get by despite Google’s breathless warnings. Not to mention the multi, multi million dollar megaphone they use to broadcast their message far and wide from the halls of Congress to the children of Members of the European Parliament.
Google’s at it again, this time as part of the litigation involving its theft of copyrights from Oracle. The problem for Google is that they can’t just run roughshod over Oracle the way they can practically everyone else, including governments. We should be paying attention because for once Google may actually get punished in a way that hurts unlike the multi-billion fines in Europe that they absorb as a cost of doing business.
Here’s the story this time. Google was getting their lunch eaten by Apple’s iPhone and needed to get Android up and running fast. Google wanted to license a bunch of Java applications that were owned by Oracle. You may say, what about Sun Microsystems which created Java? Correct, but Oracle bought Sun so that’s how Oracle got involved. And extra points if you remember who used to work at Sun Microsystems? That’s right–UNCLE SUGAR! Eric Schmidt his bad self. Strange coincidence, yes? The same Uncle Sugar who mysteriously resigned as Google’s executive chairman. Uncle Sugar says, “Me, too!” Boy we miss you Unk.
But I digress. So Google supposedly creates some of its own Java-related software. Let’s get this straight–Google could have developed their own platform with identical functions to Oracle’s Java as did Apple and Microsoft. But–and this is really what I think the case is all about–Google made verbatim copies of several Java APIs that they couldn’t reverse engineer…sorry, I mean work around. This all to avoid getting a license. And you know how they argue that they got around those verbatim copies?
You guessed it–fair use. Laughable, but no more laughable that Google’s whack a mole DMCA fake license practices they are fighting us on with their opposition to the CASE Act based on..you guessed it, fair use. Breaking the Internet, etc. It’s funny until you realize they are not kidding.
Google lost twice against Oracle in the case, but appealed its most recent failure to the Supreme Court of the United States, or “SCOTUS” as it’s known. So Google’s big strong line in their papers is this:
Given the ubiquity of smartphones today, it is easy to forget the challenges that developers initially faced in building the operating systems that allow modern smartphones to perform their myriad functions. Among other things, developers had to account for smaller processors, limited memory and battery life, and the need to support mobile communications and interactive applications….[If Google loses the case, the ruling] will upend the longstanding expectation of software developers that they are free to use existing software interfaces to build new computer programs. Developers who have invested in learning free and open programming languages such as Java will be unable to use those skills to create programs for new platforms—a result that will undermine both competition and innovation.
Yep…law and order every time, marshal. Google wants to wrap itself in the flag of those plucky “developers” who are just incapable of speaking for themselves so Google must do it for them as well as truth, justice and the American Way. This is about as believable as Google positioning themselves to be on the side of artists because they paid some YouTubers to make propaganda against the European Copyright Directive.
Will innovation survive? Will the Internet be broken? Or did the boy cry wolf one too many times? Will justice be done for once and done to Google?
Stay tuned. There may be another Wreck-It Ralph sequel in the works .
[Editor Charlie sez: Challenging Google will break the Internet!! Again!! Everybody drink!!]
I freely admit that one reason I procrastinated when it came to digging into Oracle v. Google (now Google v. Oracle) is the fact that this nine-year litigation, now headed to the Supreme Court, deals with software. Unlike most creative arts in which I have some background and knowledge, software might as well be magic spells that make our devices run (or not); and although this form of authorship is generally invisible or incomprehensible to most of us users, the code-writers say it entails creative expression, and so does the copyright law since 1980.
This clash-of-titans lawsuit, which currently stands with two rulings (in 2014 and 2017) in Oracle’s favor at the Federal Circuit Court of Appeals, will now ask the Supreme Court to settle two main legal questions: 1) whether the specific code (part of Oracle’s Java API) used by Google without a license in the development of Android is copyrightable in the first place; and 2) if that code is protected by copyright, whether Google’s use is protected by the fair use doctrine. I will actually address the legal narrative and issues in subsequent posts because on top of the triable matters and doctrinal debates, is a business and PR story that should probably be addressed first.
Selena Gomez’s ‘Lose You To Love Me’ generated 600k views on Genius’ website on release day alone, generating a 75% click-through rate. Then Google added a OneBox for the track, which Genius says dropped its click-through rate from 75% to 5%.
There’s a case shaping up in the U.S. Supreme Court that I haven’t paid too much attention to–but suddenly realized it’s something we should all care about because it could set precedent for fair use cases for decades to come: Google v. Oracle.
[ARW readers will remember the Oracle case because Judge William Alsop required the parties (provoked by Google shills) to file with the Court a list of the then-current “advocacy” groups Google paid that were also engaged in commentary about the case to affect public opinion. We styled this filing the “Google Shill List” and it has been a useful resource that includes many of the same amici in the current SCOTUS appeal such as EFF, Jonathan Band, Public Knowledge, Engine Advocacy, CCIA, and so on to include the cozy and dedicated group of likeminded people.]
On the surface, the case is about the Java software code and certain Java libraries developed by Sun Microsystems, later acquired by Oracle. But digging a little deeper it is also about Google’s obsession with “permissionless innovation”, Newspeak for “theft.” And when I say “Google”, I don’t really mean Google as a company. I mean the insiders. This because of Google’s governance and dual class structure that gives Larry Page, Sergei Brin and Eric Schmidt control over the company and the ability to waste the shareholders money settling claims for their bad behavior and terrible management (such as $500 million for violating the Controlled Substances Act and billions in fines for competition law violations around the world)–and now this Oracle case.
So we will refer to “Google” but really we’re talking about the Google ruling class with 10:1 voting power: Larry, Sergei and Eric.
Sun originally applauded Google for using the Java language. But after Oracle acquired Sun, it sued Google for copyright infringement.
Let’s not just blow past that statement. That one sounds like Google would like to cut back the ability of a copyright owner to decide when and where to enforce their rights, including a subsequent purchaser of copyrights. Because Sun, you see, were behaving like right thinking boys and girls, and then the evil ones came along to challenge Google the Sun God…or something like that. Or said another way, 2+2=5. And don’t you forget it.
You can see that Google would like to push that angle.
If, for example, a music publisher lacking the means to sue Google for infringing their catalog was later acquired by someone with the means to do. That buyer then sues Google for those pre-acquisition infringements. A ruling for Google in the current SCOTUS appeal could easily send a message that protects Google’s massive infringement through search, YouTube and God knows what else.
But at the heart of the Google infringement of Oracle’s copyrights is the “verbatim” copying of certain Java code into the Java-based Android systems. As the amicus brief by the United States tells us, one of the questions presented to SCOTUS is:
Whether the court of appeals correctly held that no reasonable jury could find that petitioner’s verbatim copying of respondent’s original computer code into a competing commercial product was fair use….
[Google] created much of the Android library from scratch. For 37 of the 168 packages included in the Android library, however, [Google] copied the Java declaring code verbatim, while writing its own implementing code.
As we have joked for years, Google thinks a fair use is when a YouTube user makes a verbatim copy of a television program or concert and posts it on YouTube in a different file format–you know, transformative. Which is, of course, fair use. Or was it a parody, I forget.
The brief by the United States disagrees, and so do I.
So let’s be clear: This case is about Google getting away with verbatim copying that they then commercially exploit as only Google can. And then scream fair use.
You have to wonder why SCOTUS took this case. I suspect it has something to do with this absurd “transformative use” theme we have seen Google use again and again and again.
Over more than a decade, Google and foundations run by its leaders have given hundreds of millions of dollars to journalists and news organizations around the world, sponsoring drones in Nigeria and Kenya, and local news in the US. But according to a new report, these grants tend to be made in places where the company faces pressure from politicians, the public, and the press, raising questions about whether the tech giant is committed to social good or buying itself goodwill.
The report, written by researchers at the Campaign for Accountability’s Google Transparency Project, shows a spike in funding in Europe when Google was under pressure in the mid- to late-2010s, and a subsequent uptick in the US amid a backlash that’s led to a Department of Justice investigation and calls for its breakup.