YouTube, Music Industry Relationship Gets Testy

Posted on Posted in CASHBOX Entertainment News, CASHBOX Industry News, CASHBOX Music

Major record labels are preparing to hit back at a Google-funded report that touts the value of YouTube to the music industry, ridiculing the report’s conclusion that YouTube boosts business for artists and their labels by giving them better exposure.

According to The NYPost, the beef is escalating as music labels are mounting legal challenges here and in Europe against so-called “safe harbor” provisions in copyright laws that don’t hold Web-based platforms like YouTube liable for infringing content that’s posted by third parties on their sites.

In YouTube’s defense, its owner, Google, backed a 104-page study from UK-based consultant RBB Economics called “Value of YouTube to the Music Industry.”

The report claims that without YouTube, 85 percent of its users would be headed to lower-paying services.

“It’s hard to even understand which services are even available that pay less than that,” said one music source.

Top-level music sources say the remaining 15 percent of YouTube users are hugely valuable because there are so many of them. Even that small slice of YouTube users headed to paid service would be three times more beneficial to music industry coffers than the current percentage of ad revenue and per-stream rate of 3 cents, according to one source.

According to the RBB report, paid streaming music services have continued to grow alongside YouTube. The report says that YouTube is aiding the music industry by helping promote sales rather than hindering them. The report also states that YouTube has generated $1 billion in revenue for the music labels.

YouTube. which is led by CEO Susan Wojcicki, is projected to reach $7.05 billion in ad revenue in 2017, a 26 percent jump, according to eMarketer data. YouTube has 185.9 million monthly users in the US, the company said.

Universal Music and Sony Music want YouTube to pay higher rates that are more akin to what paid streaming services such as Spotify and Apple cough up.

International music organization IFPI says paid streamers paid up $3.9 billion to the music labels in 2016 on just 212 million users.