“One of the issues behind Google’s decision to launch its Music Beta Cloud service without the necessary licenses has also been felt in negotiations between the majors and Apple over the latter’s forthcoming cloud offering, sources told Billboard.
The Google negotiations derailed for a number of reasons, sources said, but one of them occurred when Universal Music Group and Sony Music Entertainment demanded a higher cut of the locker revenue than the business model proposed by the search engine could accommodate.
Google was willing to give the music-rights holders 70% of the revenue derived from its cloud service, with it retaining 30%, sources told Billboard. But Google had agreed to pay music publishers a 12% all-in portion of the revenues for performance, mechanical and ephemeral licenses, which means that the master rights owner of the recorded music side of the majors would get 58% of the revenue. Meanwhile, sources said that Google proposed to pay independents less than majors, initially offering the indie record label sector a 53% slice of the revenue. Some indie executives said Google may have started with that offer, but they are fighting for a larger cut. (Reps for Google declined to comment on the situation.)
But depending on how you look at it, the Universal and Sony demands on the split could be seen as a way to pry 2% of the Google cloud revenue from the music-publishing side of the business — or were the two majors trying to take that 2% revenue cut out of Google’s share? From the publishers’ point of view, the labels are being greedy at their expense. . .”
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