Search giant Google Inc.’s (GOOGL) YouTube video platform might get sued if it doesn’t remove around 20,000 music videos. This may lead to YouTube facing an expensive lawsuit of $1 billion if it does not pull down the songs.
Global Music Rights, a music licensing group who owns the rights to the catalogue of major music figures including Pharrell Williams, the Eagles and John Lennon, has asked YouTube to remove 20,000 videos featuring its artists. It should be ready to face a lawsuit if it declines to do so. Global Music Rights claims that the songs have been unlawfully posted online.
This is a continuation of the dispute where Irving Azoff, the founder of Global Music Rights, had accused YouTube of posting videos without proper rights. Azoff has increased the pressure to license since November, when YouTube rolled out its much-awaited Music Key subscription service to compete with Spotify and Pandora (P).
YouTube has however refused to remove the songs and rejected Global Music Rights’ claims saying that it does have the rights. The licensing from ASCAP and BMI makes it legal for YouTube to post music until the contract ends, irrespective of how the artists may object.
Google doesn’t seem to be distracted by the probable lawsuit and will focus on searching for deals with labels, publishers, collection societies and more to bring artists' music into YouTube Music Key and grow its music subscription business.
Its new Music Key service lets subscribers use the YouTube phone app to watch music videos and listen to songs without any ad breaks. Launched at an introductory price of $7.99 a month, the music keeps playing regardless of what applications subscribers use. Subscribers can listen to music even if they lose Internet connection. The music can also be saved on the subscribers’ phone. As a part of the new subscription service, big music labels like Universal, Sony and Warner have reached licensing deals with YouTube.
The launch is limited to the U.S., Spain, Italy, Finland, UK and Portugal as of now. It is available by invitation to only a few users that YouTube deems to be heavy music listeners.
Google currently has a Zacks Rank #4 (Sell). Investors can consider Mercadolibre, Inc. (MELI) and Baidu Inc. (BIDU), both holding a Zacks Rank #2 (Buy).
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