YouTube and the next step

After five years of negotiations, STIM signed an agreement with YouTube this past fall.

This past fall, STIM's signing of an agreement with YouTube was something of a milestone in the copyright world. The agreement means that STIM affiliates are paid for the music YouTube users in Europe listen to. And many music creators have great expectations.

"As do we at STIM, of course," says Claudia Salazar. "The license agreement is an important acknowledgment for our affiliated rights holders and publishers. This agreement shows that copyright continues to play a role in the digital music world."

Under the agreement with YouTube, STIM directly licenses the STIM repertoire throughout Europe. This means that STIM collects license fees directly within the entire territory and distributes them to the authors, rather than going via the individual collecting society of each country.

"Direct licensing across borders is a natural development, and one made possible by digital music use. We gain a fairer and more effective system while our affiliates receive their royalties faster and more reliably," says Robert Gehring, Head of STIM's Member and Publisher Service.

On the flip side, it will take time to implement all the new processes.

"The new methods for administering rights and the fact that we have to collect money across national borders demand a great deal of initial work. We're working with a development project and a reference group comprised of STIM-affiliated publishers to examine the requirements established in the project. It will take some time before things are running smoothly, but we're on the right track," says Claudia.

The fact that this is a new licensing area also affects the size of the first royalty payments.

– "As the processes are refined, royalty payments will increase, but puzzling together our affiliates' works with millions of video clips streamed throughout Europe is a complex challenge and will take time."

Another factor that can complicate matters is the existence of several direct-licensing music publishers and copyright organizations in Europe. All of them bill YouTube, and since they all have different works databases, sometimes there are contradictions. This, in turn, can delay STIM's payments.

"When several actors bill YouTube for the repertoires they manage, in certain circumstances YouTube may be overcharged, and in such cases STIM doesn't receive the entire billed amount. As a result, we will not distribute any royalties until we've been paid by YouTube. We are simply unable to advance such sums," says Robert.

So how does the YouTube agreement work in practice?

"The agreement means that STIM receives a share of YouTube's advertising revenue. If YouTube sells many advertisements, then the authors receive more remuneration. If YouTube only sells a few advertisements, the authors get less money."

STIM will distribute this revenue to rights holders, regardless of whether advertisements are played before their clips.

"We want our affiliated authors to get paid when their works are performed, based on how many people view the clips," says Robert. "That's our mandate and that's how our traditional distribution model works, which is why we're applying the same principle here."

Seven steps from agreement to payment

1.   STIM and YouTube have signed a joint agreement.

2.   STIM receives music reports from YouTube.

3.   STIM reviews the reports and identifies which parts of the repertoire stems from STIM-affiliated authors.

4.   STIM collates billing data.

5.   STIM bills YouTube.

6.   YouTube pays the bill.

7.   STIM pays the authors whose works have been identified.

STIM and YouTube – how it works

YouTube is the world's largest entertainment service and distributor of audio-visual content. Here are the most common questions STIM has been asked about the agreement, which was signed in October.

How does STIM know what has been played on YouTube?

YouTube uses several techniques to identify the music that is played. They send a report to STIM, which is compared with the works register for matches. Read more about YouTube's content identification at support.google.com/youtube.

Does my song have to be preceded by an advertisement for me to get paid?

No, advertising revenue governs the total amount YouTube pays, but STIM's royalty payments are based on the number of views. In other words, for STIM-affiliated rights holders it makes no difference whether YouTube shows an advertisement before a video clip containing your music, as long as STIM has been able to match the concerned YouTube video with your musical work in STIM's works register.

Are there any restrictions on the royalty payments?

Yes, the lower limit for payment is SEK 200. If this amount is not reached, STIM retains the money until you reach this lower limit.

Does the agreement only apply in Sweden?

No, it's a pan-European agreement, that is, it covers all of Europe. As such, a STIM affiliate receives remuneration from STIM even if their work is played, for example, in Spain.

When is the money paid?

Every quarter. If everything goes to plan, the first payments will be made at the end of 2014 and will cover the fourth quarter of 2013. However, this is conditional upon YouTube having paid the bill from STIM, which cannot distribute royalties until payment has been received.