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YouTube says it paid the music industry over $4bn in the last 12 months

YouTube has paid out more than $4bn to the music industry in the last 12 months, according to its head of music Lyor Cohen.

The new figure was the focus for a blog post published by Cohen this afternoon, in which he also said that YouTube’s premium subscription services have “added more paid members in Q1 ’21 than in any other quarter since launch.”

Cohen did not include an updated figure for those paid memberships, which stood at 30 million globally in October 2020, plus another five million people on free trials of YouTube Music Premium and YouTube Premium.

According to Cohen, more than 30% of those $4bn payouts to rightsholders and musicians came from user-generated content: videos uploaded by YouTube users, and claimed / monetised by rightsholders using its Content ID system.

This is a surprising figure. As recently as January this year (in its submission to the UK’s music streaming economics inquiry) YouTube said that “over half of the revenue we send to the music industry comes from Content ID claims”.

Now it’s merely ‘over 30%’ which points to the impact of YouTube’s premium subscriptions on the breakdown of its payouts to the music business, as well as other kinds of revenue being generated on the service. More of which later.

“I’ve seen this industry evolve from an audio business, to an audio-visual business, and now – as my friend Chuck D puts it – to a visual-audio business,” wrote Cohen.

“As a visual-audio platform, our goal is to become the leading revenue generator for the music industry and to help artists around the world build a career making music.”

That goal sparked a row at the streaming inquiry earlier this year, when Geoff Taylor, boss of industry body the BPI, expressed scepticism (“I don’t really recognise the projections that YouTube has”) over whether YouTube was on track to become the music industry’s biggest single source of revenue.

A few hours later in her own testimony before the inquiry, YouTube’s director of government affairs and public policy Katherine Oyama said she was “surprised and a bit disappointed” by Taylor’s claim.

Do the figures published by Lyor Cohen today shed any light on YouTube’s progress? Its music payouts are certainly growing: in the calendar year 2019, it paid out more than $3bn to the music industry, according to CEO Susan Wojcicki, writing in February 2020.

To become the music industry’s leading revenue generator, however, YouTube will have to overtake Spotify. That company’s last three annual reports reveal that its lifetime royalty payouts grew from €10bn at the end of 2018 to €15bn at the end of 2019, and €21bn at the end of 2020.

One might think that means Spotify’s year-on-year growth in royalty payouts is 40% – from €15bn to €21bn, so €6bn – but its latest annual report added that “in 2020, our expenses for rights holders grew by 17% compared to the prior year”.

Meanwhile, Spotify’s recently-launched Loud & Clear website claims that “last year in 2020, we paid out over $5 billion to rights holders” which is less than the dollar equivalent of €6bn.

Let’s set that confusion aside. Spotify’s royalty payouts grew by 17% between 2019 and 2020 to more than $5bn. YouTube’s grew by around 33.3% between calendar-year 2019 (the Wojcicki figure) and ‘the last 12 months’ now (Cohen’s announcement) to more than $4bn.

Who’ll win the race? Pick your horse! Or don’t: in a sense, it doesn’t really matter which of Spotify and YouTube ultimately gets to claim to be the music industry’s biggest revenue source.

What matters is that payouts from both are growing, along with other global DSPs (Amazon Music, Apple Music etc), regional DSPs (Tencent Music and NetEase Cloud Music in China; Gaana, JioSaavn and Wynk Music in India, etc); royalties from social apps like Instagram, Snapchat and TikTok; and as licensing deals are signed, from games and fitness startups and livestreaming services and…

A bigger picture of growth, including YouTube. Cohen also flagged up its work with ticketing, merchandise, channel memberships and paid livestreams in his blog post, noting that K-Pop stars Blackpink sold nearly 280k channel memberships with their ‘The Show’ livestream.

(The memberships cost $29.99 for the standard tier or $39.99 for the plus tier, which suggests gross revenues from the concert of at least $8.4m – and that’s only if every fan bought the standard package.)

These features seem set, like subscriptions, to become a bigger part of YouTube’s payouts to the music industry over time – and are already an unknown proportion of the $4bn payouts in the last year.

But we can’t cover all this without also referring to the debate about how all this impacts on artists and songwriters, and the familiar questions: firstly about whether these companies should be paying even more (and what that might entail) and secondly about how their payouts are shared out between rightsholders and musicians.

YouTube, like other DSPs, is making its case both to rightsholders and musicians about the positive role it can play in the industry. The stats involved will fuel our understanding of how the industry is evolving, even if they also fuel the (important) arguments around it.

Source: musically.com

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