YouTube's $1 Billion Royalties Are Not Enough, Says Music Industry (bbc.com)

YouTube said Tuesday that it has paid the music industry over one billion dollars in advertising revenue in the past 12 months. The music industry thinks that sum is not enough. From a report on BBC: "Google has issued more unexplained numbers on what it claims YouTube pays the music industry," said a spokesperson for the global music body, the IFPI. "The announcement gives little reason to celebrate, however. With 800 million music users worldwide, YouTube is generating revenues of just over $1 per user for the entire year. "This pales in comparison to the revenue generated by other services, ranging from Apple to Deezer to Spotify. For example, in 2015 Spotify alone paid record labels some $2bn, equivalent to an estimated $18 per user." In his blog post, Mr Kyncl conceded that the current model was not perfect, arguing: "There is a lot of work that must be done by YouTube and the industry as a whole. "But we are excited to see the momentum," he added.

Comments

Here's an idea

[Anonymous Coward]

Cut out the greedy RIAA pigs and give the money straight to the artist.

Re:Here's an idea

[ShanghaiBill]

Cut out the greedy RIAA pigs and give the money straight to the artist.

The RIAA represents the labels and distributors. There is no requirement for musicians to sign with a label, or to use a distributor. The are completely free to go-it-alone, and many do. However, many independent artists would leap at the change to sign with a label, since 10% of something is better than 100% of nothing.

It is common for creative people to assume that they create the only value that matters, and that marketing, promotion, and distribution are all worthless.

Re:Here's an idea

[lgw]

I haven't found music through marketing since I was a teen. Sure, marketing in any industry will always be able to sell inferior crap to the ignorant, and that may never change, but there are plenty of ways to discover music these days. Heck, do labels even bother with payola any more (do kids still listen to the radio?).

These days I usually discover new artists through the various "people who bought/listened to X also bought/listened to Y" algorithms on Amazon, YouTube, etc. I think a lot of people find new music through Spotify's algorithms (has there been a Spotify payola scandal yet?).

Marketing was just more important in the days of broadcast media and limited distribution channels for records. Now there's no scarcity of airtime or shelf space.

Re:Here's an idea

[110010001000]

100% correct. You can go on Youtube and see some AMAZING musicians. There are a ton. Piano players who play better than professionals who sell out concert halls. But skill isn't what makes a FINANCIALLY successful musician. You need the RIAA and their ilk for that.

Re:Here's an idea

[The-Ixian]

Everyone hates the RIAA, but the fact is without the marketing by these entities you would never have found your "favorite" bands

I disagree.

While it may be true that you may be initially steered in the general direction of good music, you rarely ever hear good music in places where big budget marketing is.

For example, I heard Metallica on the radio when I was young and I liked it. But then my own research led to Megadeth which led to metal shows where I learned about bands like Fear Factory which led to euro metal like In Flames which led to other record labels like Century Media and Nuclear Blast records and all of those artists, etc, etc.

While it is impossible for me to know for sure, I would like to believe that the RIAA had nothing to do with my music listening evolution. At the very least, they haven't received any money from me in quite a long time as I buy directly from the artist, from emusic.com or by just browsing the second hand CDs at the local shop.

Re:Here's an idea

[110010001000]

All those "indie" record labels you mentioned are affiliated with the RIAA. For example, Nuclear Blast is distributed by BMG Entertainment. You are a perfect example of how marketing lead you to your favorite bands in your particular genre.

Re:Here's an idea

[drakaan]

...or bands that we find via something like YouTube. That's the real reason the RIAA is trying to squeeze Google. They don't like the deal they got with Apple's iTunes, and don't want to be even *more* left behind. They failed to embrace online digital distribution when customers initially clamored for it, tried to sue their way out of it being possible, and now are scrambling to try and figure out how to claw their way back to the same type of margins they once had when they controlled distribution and marketing.

Re:Here's an idea

[110010001000]

You aren't cool enough to understand the brilliance of the underground players I am talking about, so I won't bother. As a special snowflake, my music tastes aren't swayed by marketing at all. I am real hard core and listen to music based on my deep understanding of the art.

Re:Here's an idea

[110010001000]

I only listen to live music created by aborigines. Because that is the only REAL music and I am not gonna pay the RIAA a dime!

Re:Here's an idea

[AthanasiusKircher]

However, many independent artists would leap at the change to sign with a label, since 10% of something is better than 100% of nothing.

THIS. People always make the mistake of looking at high revenues that big-name artists get and dream of doing that themselves.

But that's kinda like dreaming of playing for the NBA or NFL or whatever -- sure, it happens, but the 99% of the kids out there playing high school sports will never have a chance at those sorts of salaries.

It is common for creative people to assume that they create the only value that matters, and that marketing, promotion, and distribution are all worthless.

Exactly. There's this new myth of "YouTube-o-genesis" -- just put your stuff up on YouTube, and users can "discover you," and then you start raking in the big bucks, no labels or whatever needed.

And yes, that HAS happened. But for every sudden "YouTube sensation," there are 10,000 people out there who are uploading stuff that gets 5 views only from their friends. And among those 10,000 unlucky people are usually loads of talented folks... they just need some help getting attention.

Labels can still be a path to help that (though they're not the ONLY path). Getting a few percent of revenue from a label that actually promotes you, gets you gigs, etc., is likely a lot better than the beer money people chip in when you just sing at the local karaoke bar.

And I hate the RIAA's abusive copyright tactics as much as anyone else here, and I'll be the first to criticize labels that do bring in large revenues for their executives and staff, but pay a pittance to artists. Nevertheless, they CAN still serve a function, and thus many independent artists still DO sign on.

Re: Here's an idea

[jxander]

You are correct: the RIAA fills a need and does provide a service.

However you seem to assume that they are the only ones who can provide this service.

If the RIAA vanished tomorrow, new mechanisms would form to help people find music they like. And those new mechanisms would be better for both the artists and listener.

Re:Here's an idea

[TroII]

I love the song "Space Truckin'" by Deep Purple. Does that make me a space nutter?

Re:Here's an idea

[Baloroth]

Except the RIAA doesn't do any of that. The RIAA does not do marketing, the record company itself does. RIAA doesn't sign artists, and it doesn't pay artists. Mostly, what the RIAA does is lobby the government, sue people, and desperately try to stay relevant.

Re:Here's an idea

[lgw]

Your fallacy of poisoning the well does not constitute an argument. Sophistry, sure, but that's different.

You have asserted "without the marketing by these entities you would never have found your favorite bands," but you have yet to make an argument for that position. I'm beginning to doubt that you can.

Re:Here's an idea

[sit1963nz]

Yeah, ever watch those crappy TV talent shows, thousands of people lining up all believing they are just an undiscovered talent. You can waste huge portions of your life finding the people with REAL talent, and even then they may only ever have one song that resonates with you. Music labels do that sorting for you, they get rid of the delusional no talent wannabes (unless it is Black Friday and Daddy has a shit ton of money). For every one real talent they waste time with thousands of idiots, that costs. The labels also invest in talent they hope will make it, spending huge sums on teaching them to play in sync, variations on playing styles, introducing them to different instruments and sounds, fitting songs to bands, practice studios, recording studios, sound engineers, etc etc etc etc. That too all costs money, and most recorded artists probably never make it really worth while, but without that support the real gems are even less likely to make it.

Re:Here's an idea

[phantomfive]

So, we can actually talk about one concert pianist who did launch their career on youtube, Valentina Lisitsa. As you can see, she actually is quite talented. Somehow she did gain popularity there, which is good for her, but if you want to make big bucks in the classical music world, you need to hook in to the system, and she did that, going on the tour circuit. She was co-opted by the system, and now she's a typical musician.

Re:Here's an idea

[tbannist]

Labels affiliated with RIAA are already finding your "favorite" bands for you. If I go through your music collection, 99% of it will be music from RIAA affiliated labels (or whatever IFPI affiliated marketing/promotion entity is in your part of the planet).

I think the point was that, while most of our current favourite bands might have be found by the RIAA, we'd still have favourite bands if the RIAA and it's affiliated labels didn't exist. In fact, there are arguments that can be made that we might actually have better music if the RIAA affiliated labels weren't picking our favourite bands for us. They have been accused many times of producing cookie-cutter music and drowning out diversity with conservative musical picks.

Re:Here's an idea

[Altrag]

Ehhh there might be. The current environment certainly isn't favorable to groups like that but who knows what things will be like in a generation or two.

Also don't forget selection bias. Standing along side Zeppelin and the Stones was 100,000 bands you've never heard of because their music wasn't good enough to last beyond the initial pop burst.

Its entirely possible that the next Stones is currently playing in some dive bar in Texas at this very moment and you won't even realize that they exist for another 10 or 15 or 20 years while they struggle to make a name for themselves among the bright lights of our modern one- or two- album contract pop singers that the RIAA dumps the second their sales drop even slightly.

Re:Here's an idea

[Gussington]

However, many independent artists would leap at the change to sign with a label, since 10% of something is better than 100% of nothing.

THIS. People always make the mistake of looking at high revenues that big-name artists get and dream of doing that themselves.

I've watched enough versions of Dragon's Den (or Shark Tank depending where you live) to know how important this is. So many fools hang on to 100% ownership because they can't figure out that $100% of peanuts is a worse position than 50% of a golden egg.

Nevertheless, they CAN still serve a function, and thus many independent artists still DO sign on.

Which is why they still exist, because they actually work.

Re:Here's an idea

[silentcoder]

The metal scene is actually still mostly like that. Perhaps less so in America but there metal was basically killed by the hair-metal movement anyway and became extremely small ever since. Ignore the Nu-metal stuff - since mostly they are of the sausage-factory variety, but you did also have Slayer, Death and Manowar who wrote their own stuff, experimented with new ideas (Manowar basically invented the combination of choral and metal music), produce their own stuff, play their own instruments and push boundaries. Even metallica has had periods where they created real art and their the most commercial metal band America ever had (and the best-selling world-wide of all time).

This is a LOT bigger in Europe - the best metal for two generations have come out of the Slavic countries - Norway, Germany and Finnland in particular and the generation before it was Britain. Priest and Maiden were fantastic and Maiden is still fantastic, still touring, still innovative - they may have grown old but they never grew stale (I saw them live a few months ago and it was one of the best shows I've ever been at). The German scene started out with bands like Accept, which was a one-hit-wonder in the US but had a long and illustrious career back home, and moved into legends like Hammerfall and Blind Guardian. Later they and their neighbours would birth bands like Amon Amarth, Children of Bodom, Korpiklaani, Nightwish - all of which had their own unique approaches to a very wide genre which had already significantly innovated from other metal subgenres (a focus on singable lyrics, low-use of bass but heavy use of rhythm guitars, extremely rapid double-bass-drum patterns, elements of opera, choral and classicalmusic mixed). And most of them are unknown outside their home countries. Meanwhile Norway gave birth to black-metal which is one-part music one part polical protest against the dominance of the state-church, and then Armenian/German band Powerwolf took the stylistics of black metal, mixed it with the musical stylings of powermetal and based their lyrics on the mythology of the Holy Roman Empire for a completely unique sound and style.

There are still great bands out there pushing boundaries, combining absurdly different influences into truly unique music - they just aren't in the USA anymore. In many ways the country is just too conservative. Every time you have an artist actually pushing boundaries, trying different things, exploring a different approach to theatrics - there's a million protesters blaming them for every ill in society. In the 1980's they burned Maiden's records (though the band didn't mind because, in their words: 'before they could burn the record - they had to buy it first'), in the 1990s they blamed Manson for Columbine (even though neither of the shooters listened to the band), a few months ago buzzfeed blamed Slipknot for the racism of Trump supporters (so it's not just the rightwingers who do that), and a judge had to tell law enforcement that listening to Insane Clown Posse does not automatically make you a gangster (so it's not just metal bands either).

That's why it doesn't happen anymore - because in America any band that doesn't toe the line very carefully will never get airplay, never get on radio - just face a constant barrage of harassment and horror. So while bands and musicians may be brave - the record companies aren't, they will have one or two controversial acts (because controversy also sells) but they won't risk anything more.

Back in the mid-1990s Oasis was planning a tour in the US which was struggling to sell, Bon Jovi at the time said "Oasis will never be very successful here, because America is too conservative"
And that's coming from the least controversial, least metal, musician to ever play hair-metal about a band that, honestly, was just a fairly average British pop-rock band who did nothing particularly original or special memorable in their music and whose sole claim to notoriety was once outselling the Bible and calling themselves "Greater than god" - which they stole from the Beatles anyway.

Wow...

[Anonymous Coward]

Comparing YouTube to Spotify.. seriously?

How many of Spotify's users are there for music? I'm betting its close to 100%.
How many of YouTube's users are there for music?

Re:Wow...

[caseih]

I would say it's a large percentage, actually. In fact I was astounded to find out a few years ago that college-age kids quite often listen to music exclusively on youtube while they are working on homework or hanging out in their flats. An astounding waste of bandwidth but it doesn't matter.

But comparing percentage of users is kind of silly. Yes 100% of spotify users are there for the music. A certain percentage of youtube users are there for the music as well, but the question is how many of them in total? I would not be surprised if youtube's total viewership that was there for music at any one time was greater than spotify's.

That said, how many billions would the record companies think is fair? 2? 10? infinity? Obviously I'd like a much greater salary too. But the market decides the fair price and if that doesn't match their greed, so be it.

I am going to say this just once.

[nitehawk214]

If you give money to the recording industry via bands with recording contracts. You are part of the problem.

Giving those assholes money enables them to feed their greed.

$0 is what is owed

[OrangeTide]

It's my opinion (IANAL) that YouTube owes the music industry nothing. And when you start paying the local thugs some protection money, they'll keep coming back to ask for more.

The music industry should bear the entire responsibility of chasing down individual YouTube users, and Google should wash their hands of the whole thing. I think that $1B would be better spent offering legal services to users that are under attack.

Make this like the Cold War, where each side tries to outspend the other. Music industry's global revenue is somewhere around $15B, and Google's is around $17B. If each organization were to play a very costly game of chicken, only Google would have the possibility of walking away from the wreak. In a mutually assured destruction scenario, that means Google wins because their destruction isn't assured. Once that thought experiment is out of the way, only then should negotiations between the two sides begin.

Re:$0 is what is owed

[wisnoskij]

The thing is that Google already deletes videos which copyright infringe, for both video and audio. Legally, I do not see how they owe them anything. Do all major sites pay RIAA money?

Re:$0 is what is owed

[Gussington]

If each organization were to play a very costly game of chicken, only Google would have the possibility of walking away from the wreak.

Except the record companies have the law on their side, and your idea is merely created of out fairy dust. Except for that it sounds great.

Re:Different business models

[SuricouRaven]

There is another difference too: The spotify users are willing to pay.

Middle hollowed out, just like everywhere

[Tablizer]

Technology and globalization have "cheapened the middle" of almost every industry. Get used to it.

The most popular performers will do well, and even get bigger access to global markets, but the middle-ground is being hollowed out because the Internet gives consumers more choice and more access to old-but-good material. And, many amateurs give out works for free either to promote them or because money is not their goal. This gives for-profit performers competition who work for peanuts.

Concert, venue, wedding, and bar performances are probably the best source of music wages, not recordings.

The rich get richer, the rest stagnate. Welcome to the club!

Re:Different business models

[Bite The Pillow]

"With 800 million music users worldwide" sounds like the MAFIAA already thought of that. However, I don't trust their estimates.

As sibling mentioned, other services have a majority of paid users. I don't think YouTube red has caught on to that extent, and that seems like the obvious disparity. And users aren't streaming YouTube music for hours in a row.

YouTube is just not targeting continuous streaming users, and I think that is audience behavior at this point. Users come for music videos or lyric videos or live performances, not streaming audio only. I doubt they could swing a change in business model if they wanted to.

Time for the dustbin of history

[uncoveror]

The recording industry is as obsolete as buggy whip manufacturers, and pop music is something frivolous that is highly overvalued. That billion is way too much.

Go ahead RIAA - push Google too far

[zerofoo]

I'd love to see the day where Google says fine - we can't agree on a price therefore, we will remove all your copyrighted content from Youtube.

The best way to handle a bully is to stand up to them. The RIAA needs Google far worse than Google needs the RIAA.

Re:Whine whine whine...

[amicusNYCL]

No, it actually is relevant. They've created a de-facto monopoly by buying up as many smaller labels as they can where they are the major player in the industry, it is hard for a band to do anything if they don't cooperate. As a result, the contract terms are famously one-sided because, again, they have the leverage to essentially dictate whatever terms they want. The only reason they own the music that other people write and produce is because that is what they demand in order for the musicians to be allowed into the system which controls the vast majority of music distribution and publishing. When we're talking about the greed of the music industry in general, the contract terms that they force musicians to agree to in order for them to be included in the system are damn well relevant.

Don't like the system, don't consume from it.

Yes, the "our way or the highway" way of thinking has been their business plan for decades. Only relatively recently have bands had a legitimate distribution network which doesn't require them to be part of the system. And, look what happens, now the recording industry is talking about how unfair it is that they only get a billion dollars from one of the distribution outlets when they think they should get a lot more. That's greedy. There's a new system that doesn't require musicians to sign over ownership of their own artwork and the establishment labels don't like it. A lot of other people have agreed and have decided to not consume from their system, and they've been whining about it ever since.

They only have themselves to blame. If they want people to think that they aren't greedy then they need to reverse the contract clauses, so that the creators are the actual owners and the labels get a small cut for distribution while the artists get the majority. And then the artists can decide how their music is used. If that happens then people won't see the labels as greedy, but when you have people working in that industry who own a lot of content while specifically taking pride in the fact that they can't produce the kinds of things which they have the rights to, it is most definitely greedy and it is most definitely relevant.

Enough is never enough

[kimvette]

For the music industry, there is no such thing as "enough profit." If someone else is getting a tiny sliver of the pie, or if they are missing out on a few crumbs of the pie, the music industry demands to be compensated with several full pies.

I agree that 10% of something

[rsilvergun]

is still more than 100% of nothing, but with some of the contracts out there the band ends up in debt paying off their "advances". 100% of 0 is better than 10% of -$100,000.