According to a recent statement from Google, the music business has received $4 billion in payouts from YouTube over the previous year. Is it possible for this to become the music business’s permanent golden child, rather than its frequent bête noire?
YouTube was once the music industry’s primary target. While there is no doubt that YouTube’s subscriber count has grown in popularity, many major music labels were unhappy with the company and its owner Google because it claimed safe harbor exemptions to avoid compensating rights owners far more for its streaming content. The term “value gap” was coined to describe the difference in price between services and merchandise. They loathed it. They were furious about it. They used to call it “value theft.”
When Lyor Cohen took over as YouTube’s worldwide head of music in 2016, he was adamant about keeping the conversation about the value gap under wraps.
He wanted to concentrate instead on how YouTube was a significant marketing, promotion, and revenue partner for the company – stressing their bright and symbiotic future rather than dwelling on present monetary disputes.
In a very aggressive way, Cohen’s charm offensive was blunt (he has a long-standing reputation for speaking frankly and rarely holding back) , and part of his “recalibration” of the discussion was to publish regular blogs about what YouTube paid out. The motto was “transparency.”
He also emphasized in interviews that the music business should stop focusing on the value gap and instead highlighted why he felt it was an important component of the ecosystem. His claims had a significant impact, with most of his blogs and interviews generating a great deal of discussion. Bodies in the music industry quickly put out statements that questioned or condemned his assertions.
As a result, the cycle was repeated.
Apple and Spotify wanted to make the most of this PR battle on YouTube by positioning themselves as more ethical participants. Although there have been several prior instances when pop artists criticized Spotify and Apple Music for, in their view, underpaying artists. In this conflict, no one was free of blame.
In this most recent blog, YouTube and Cohen want to emphasize the service’s economic benefit to the music business. It repeats the figure of $4 billion several times and specifies that only 30 percent of that amount was based on user-generated content (i.e., videos with music inside, in which the rights holders have claimed their due royalties). While the bulk of income comes from legitimate videos, it does not distinguish how much came from its ad-supported business, which pays a reduced royalty rate, and how much came from its subscription-based business, which pays a greater royalty.
There’s also no way to tell how much of the $4 billion will be paid out to record labels or artists and music publishers or songwriters.
The music business, as usual, will have more concerns than YouTube has provided answers for.
Cohen’s website is just as exuberant as it can possibly be, with words like “a golden era for the music industry” and how YouTube is “continuing to innovate with direct-to-fan items such as ticketing, merchandise, memberships, paid digital goods, and virtual ticketed events.”
His tone will be analyzed: He self-mockingly claims that his 90-year-old mother is still unsure what he does for a job (a phrase he has previously employed); “my good friend Chuck D” is mentioned; and he expresses an interest in establishing a sustainable company for fresh artists so that “the next Kurt Cobain won’t have to quit his day job.”
But this is not the most important part.
For a while, YouTube got almost all of the blame from the music industry. It was just waiting for things to change and for someone else to take the spotlight.
The wheel, as is its nature, eventually turned – accelerated by the pandemic and acts’ failure to tour – and Spotify became the new public enemy number one, with the #BrokenRecord campaign in the UK and the Justice At Spotify movement in the US putting Daniel Ek, co-founder and CEO of Swedish streaming company Spotify, on notice.
This latest YouTube blog from Cohen takes place in a different realm to the one where his previous blog was posted. Now, Spotify is the most popular source of offense.
The news comes after the UK parliamentary inquiry into the economics of streaming in January. While every audio DSP was subjected to a barrage of criticism, YouTube wasn’t completely unscathed.
For the time being, at least, it does not have to confront the fury of songwriters and musicians to the same degree as Spotify presently has; but it will only be a matter of time before that changes.
In the end, what matters is that YouTube’s statistics today don’t matter: the music business will continue to insist that it should (or, rather, it could) be a lot higher.
So the cycle continues.
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