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The battle over content

• Rory Cellan-Jones
• 8 Apr 09, 09:12 GMT

It's a month since the row between YouTube and songwriters saw all professional music videos withdrawn from the video-sharing service in the UK. And there's no sign of peace breaking out - indeed the row appears to be getting more heated.

French and German musicians are also in dispute with YouTube - with music videos now blocked from the German site, and the threat of similar action in France. And later today the Performing Rights Society holds a meeting in London where musicians will press their case for what they're calling "fair play for content creators".

What this all signals is a growing revolt by creators against the idea that "free" is the only model that works on the internet - or that getting into bed with Google is the only way to secure their online future. The musicians say they're getting peanuts - and a number have been giving chapter and verse on what exactly they earn from YouTube.

Pete Waterman says he's never made more than £11 for 100 million plays of Rick Astley's Never gonna Give You Up. Brendan Graham, who wrote You Raise Me Up, a song which appears in many forms on YouTube, and has been viewed milions of times says he got a "a very impressive royalty statement from PRS... of about 30 pages of YouTube royalties... coming to about 30 pence."

So do these figures stand up? Well neither Google - YouTube's owners - nor the PRS will give chapter and verse on their previous licensing agreement, but neither are they disputing the size of the payouts. But the problem, in the words of someone close to the negotiations, is that the PRS seems to have signed "a rubbish deal " - at least as far as the songwriters are concerned. And that's because it was struck when YouTube was in its infancy - oooh two or three years back - and nobody saw it growing into a major force in the music business.

Now the PRS has demanded a rate per stream from YouTube which Google says is just completely unrealistic - and would mean the search firm would lose money every time someone watched a music video.

Mind you, the German songwriters union has apparently looked at what the British are asking for - and demanded a rate 50 times higher.

So there's still a large gap between what the songwriters want and what Google is willing to pay. But there's a wider issue here.The YouTube business model - acting as a free platform for content and then advertising around it - just isn't working either for Google or for the content creators.

In a recent study, analysts at Credit Suisse calculated that running YouTube would cost $711m this year - that includes the huge sums needed to store videos as well as the cash paid out in licensing fees. But Credit Suisse says the revenue the site would earn from advertising would amount to no more than $240m, even assuming a 20% rise this year.

You don't have to be very good at maths to see that the sums just don't add up - and will look even less attractive if Google has to pay out more to the content creators. But the PRS says that's not its problem - "Why should our members subsidise YouTube's failed business model?" a spokesman asked me.

And they're not the only creators asking whether handing over their content to Google is quite such a good idea. Newspapers are also beginning to grumble again about the return - or lack of it - they get from Google News.

Eric Schmidt, Google's CEO, hit back yesterday accusing the newspaper industry of "dropping the ball" when it came to online distribution.

On one side you've got content creators, from songwriters to journalists, seeing "analogue dollars turning into online cents", as they describe it. On the other, you've got the only business that's really mastered the art of making large sums from online content - without producing any itself. Prepare for a long battle.

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