The legal dispute between Ultra Records and YouTube vlogger Michelle Phan could prompt some deeper questions about copyright use on the platform, David Balfour suggests

24 July 2014 - Editorial

The legal dispute between Ultra Records and YouTube vlogger Michelle Phan could prompt some deeper questions about copyright use on the platform, David Balfour suggests

Ultra Records this week filed a suit against YouTube vlogger Michelle Phan over alleged unauthorised use of their music. Simple enough, on the surface. This story is quite a lot more complex and interesting than it may first appear however. 

Things initially got complicated when DJ Kaskade, the artist/DJ whose music was allegedly infringed, came out in public support of Phan and tweeted his lack of backing for Ultra’s action. This wasn’t the bit that really interested us however. It seemed a fairly typical case of an artist complaining about how his label uses the rights which he previously signed over. It could be potentially embarrassing from a PR perspective, but would also appear to be legally irrelevant.

What really got us intrigued about the lawsuit however, is the question of how Phan was able to ‘infringe’ Ultra’s rights on YouTube in the first place. Most labels will be familiar with the Content ID system employed by YouTube. This both enables rightsholders such as Ultra to manage where and how their music is used on the platform, and it enables Google to show to the outside world that it has a solid copyright management system in place.

What appears to have been the case on Phan’s channel however is that it was able to bypass Content ID entirely, and use copyrighted material without the automatic fingerprinting and referencing which is normally the default. How was this possible?

It’s key to realise that Phan’s channel is not a simple bedroom operation. Her channel has nearly seven million subscribers, whilst she has been estimated to earn in the region of $5m a year, thanks to direct YouTube income alongside sponsorship deals and other ancillary revenue streams. Furthermore, Phan also runs a Multi Channel Network (MCN) called the For All Women Network (FAWN) and in May 2014, struck a major deal with a US wing TV company Endemol to around that MCN. 

How could a business of the size and YouTube-savviness of Phan’s end up (allegedly) infringing copyrights to what seems like such a large extent? The first key bit of information seems to be that Phan’s channel and the MCN under which it is housed come into a previously-mysterious category called ‘Managed Channels’. These differ from the more typical ‘Affiliate Channels’ in that they are allowed to bypass Content ID and instead give assurances to YouTube that they are undertaking the necessary work to ensure that they have cleared any copyrights which they want to use on their channels. This isn’t of itself that controversial, except that the system seems to have spectacularly broken down.

Phan’s lawyers have claimed in an initial statement that Ultra gave permission for the use of its music on its channel, and has signalled its intention to countersue. We can’t speculate on the actual truth here – that is for the court to investigate. It would seem highly unlikely however, that Ultra would pursue a lawsuit if it had indeed given permission for the use of its music on Phan’s channel. However, Ultra additionally claims in its lawsuit that it warned about the alleged infringement and that Phan’s channel continued “to wilfully infringe in blatant disregard of plaintiff’s rights of ownership”. This is where it gets really interesting. If Phan was able to both side-step Content ID and to fail to respond to takedown notices, as is claimed, it poses some serious question about whether YouTube’s copyright control measures are fit for purpose. Furthermore, if YouTube itself received takedown notices for the content and failed to act, its own legal position would be questionable.

What’s especially concerning here is the suggestion that some of the highest-volume and most financially successful channels on the YouTube ecosystem might be subject to a dramatically weakened protection framework. Questions are already being asked about how many other of these ‘Managed’ channels exist, and to what extend copyrights might be being infringed on those also. There’s a clear need for greater transparency around who these channels are, why they are allowed to bypass Content ID and whether they are somehow flouting DMCA takedown notices, compliance with which is fundamental to the legality of their channels and of YouTube as a platform. Music companies, who might previously have thought Content ID was effectively monitoring and administering the use of their copyrights, need to know the answers to these questions.

One depressing aspect of this case is the fact that Michelle Phan’s official response to the lawsuit noted the belief that Phan’s videos promoted the music contained within them and "showcased [them] to an international audience." Is she therefore saying that the music provided no tangible value to her channel, and that all the value was delivered from her channel to the artists featured? She certainly seems to be saying that her promotion clout is such that Ultra should be happy for the exposure, without payment. We’re kind of stunned that anyone with a significant business making use of music still pursues this ‘promotion’ line in 2014. We doubt Ultra disputes the promotional clout of Phan’s channel. That in no way substitutes the right for the label to be compensated for the use of its music however. 

It feels like there’s still quite a lot to come out in the wash here. If the case proves to be as clear cut as Ultra would assert, there are some serious questions which need to be asked of YouTube itself. We feel that YouTube must now act to clarify questions around Managed channels, their ability to use copyrighted material, and how they respond to notices of alleged infringement.