"crappy licensing deal" doesn't really indicate an even article.
Basically same as everyone else they are siding with the labels and adapting their narrative.
Yes, if Youtube can't licence the music the videos will get flagged by ContentID, which means they gets "blocked" because they don't have the license to show them, it's a semantics play and circular logic that the labels are offering and as with most attacks on Google the media has lapped it up.
As to the actual term we only have the labels' word on it and they are an interested party in the midst of negotiations.
"The BBC understands that even if blocks do go ahead, content from artists signed to independent labels will remain available on YouTube via channels such as Vevo."
I don't really care about their wording. The proposition that Google has made the choice that labels can either (1) join the premium service or (2) not be on YouTube anymore does not really seem disputed by anyone other than you. Except you may not even dispute it now? If you don't, you may very well not agree with the opinions and commentary people are sharing about the situation, but that's a disagreement about interpretation not facts.
Is there any evidence labels don't have option (3) provide some videos for free (presumably for promotional purposes) and pull the others? On what planet would Google forbid that? Practically speaking, how would they (absent the label cooperating for the takedowns by providing audio/video fingerprints, etc.)?
There might even be option (4) provide some videos for the paid service and pull the others, but that's more ambiguous because it's possible that could be forbidden contractually (e.g. if you participate in the paid services, you have to give it all videos you make public!y available or somesuch) and there are plausible reasons that Google might care.
I wonder how covers/unofficial recordings/karaoke will be dealt with. That ecosystem is a real differentiating factor for Youtube compared to a service like spotify. A lot of the top results for major songs are not the original recording.
Basically same as everyone else they are siding with the labels and adapting their narrative.
Yes, if Youtube can't licence the music the videos will get flagged by ContentID, which means they gets "blocked" because they don't have the license to show them, it's a semantics play and circular logic that the labels are offering and as with most attacks on Google the media has lapped it up.
As to the actual term we only have the labels' word on it and they are an interested party in the midst of negotiations.
Edit:
This spells out that it's a "renegotiation" process, the labels want more from the free streaming to agree to the paid one: http://www.bbc.com/news/technology-27891883
And: "content from artists signed to independent labels will remain available on YouTube via channels such as Vevo".