
Torn Between Two YouTubes - AndrewDucker
http://www.bloomberg.com/gadfly/articles/2016-05-13/record-labels-battle-youtube-with-complicated-emotions
======
elevensies
> _half of Internet users in the U.S. listen to music on YouTube -- by far the
> most popular access point -- but YouTube is responsible for only 4 percent
> of revenue to the industry,_

> _Song downloads and streaming music account for 70 percent of U.S. music
> sales. But the industry 's total revenue has dropped by 66 percent since
> 1999._

The profusion of bullshit "statistics" being used the advance a prejudiced
position is so grating. I know why the music publishers are doing it, but the
journalists don't have to just repeat it. There are actual interesting numbers
that could be calculated.

Of course music revenue is down after moving to a massively more efficient
platform. Profit is the relevant metric.

50% "listen on youtube", and generate "4% of revenue" ... I don't even know
how this could be changed into a meaningful statistic. I guess you could
compare TV+radio listener numbers and revenue share 1996 versus 2016 ... for
it to really make any sense you'd have to compare listeners and revenue
through all mediums. If there is a change of composition away from high-
revenue mediums to lower revenue mediums, that would be more relevant.

And why use the year 2000 as the baseline, when recorded music has a 100-year
history.

~~~
amelius
> half of Internet users in the U.S. listen to music on YouTube

The question is: how often?

~~~
copperx
No, my question is why? There are so many other platforms optimized for music
listening. Why YouTube?

~~~
protomyth
Search, easy playlists, video, and ok suggestions. It's good enough and has
pretty much every song.

~~~
detaro
Also free and no login or special application necessary. Just grab a browser
and go.

~~~
protomyth
That's probably two of the bigger reasons. Youtube has no ceremony to watch
videos. Its a website with little friction.

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nickpsecurity
It's a good article. I think attorneys of Google, etc should repeat every
chance they get the part about how music industry destroyed all the people
doing what they say they want. And show the greed of the split they ask for
with its effects on other business. As in, the music industry is the perp
instead of the victim.

Also, people should bring up just how hard and expensive it was (or is) to
acquire licenses for things like wedding videos. Distributing your wedding
video is a cppyright violation if an unlicensed song happens to be playing.
Music industry, if you could get to them, would license you the rights for
sometimes $10,000 or something. Absolutely ridiculous. A modern service exists
that makes it easier but still doesn't for all songs & still can be expensive.
This kind of crap is why they have so much opposition even from those who
otherwise would want to pay them.

~~~
colejohnson66
I see the record labels greed as a feedback loop: People think music is worth
less than its price, so they pirate it. Piracy lowers sales. To compensate,
the prices go up causing more people to pirate.

When selling a product, what would you prefer? 100 sales at $10 or 20 sales at
$20? What the record labels see is that less people buy it less at the higher
price, so it must be piracy!

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TazeTSchnitzel
Without YouTube, I dare say I might not have bought… what… sixteen of the
albums in my current collection? Almost all of the music I've bought is from
artists I first heard on YouTube.

~~~
globuous
I think Neil Young said something along the lines of "I look at radio as gone
… Piracy is the new radio, that’s how music gets around."

He uses the word piracy which doesn't apply here, but I think what he says is
relevant in this context: a lot of people hear music for free, like it, and
then buy it. Maybe they hear it for free on the radio, through torrenting, or
through youtube. Although the radio and torrenting does generate revenue as
well as promotion whereas torrenting only does promotion.

~~~
manmal
Or better yet, go to a concert. Most artists could never live off CDs, but
from $30 tickets they could.

~~~
x0x0
my startup idea that someone else should totally build:

Sell a soundboard recording of the show I went to for $25 on the spot as I
leave. I went to the show so I now have an emotional connection to that
particular performance. Will this get shared? Sure, but the majority of people
downloading bootlegs own the artists' oeuvre anyway.

~~~
jowiar
At least for Springsteen's current tour, this is almost the case (modulo a
couple of days). I think livedownloads.com is the backing entity.

~~~
peddamat
The fact that larger bands don't up sell a drone video of each show is just
leaving cash on the table. I'd happily pay $30-$50 for a video recording of
every show I attend.

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droithomme
The graph doesn't show revenue from FM or AM radio.

YouTube is comparable to radio. A place people discover and listen to music,
which they later buy as downloads, CDs, vinyl, etc.

Much YouTube music views are of official videos that the artists and labels
themselves upload.

If anything, the record industry should be paying YouTube more for exposure
and marketing. It's time for the record companies to stop freeloading off
YouTube and pay their fair share for their use of this important music
marketing channel.

~~~
fatman13gg
Agreed. I think some of good indie musician on YouTube are much better off
alone than with a record company.

People these days have many more means of entertainment. I think it is hard to
get super popular by just doing music alone. Pairing with movie, games, or
other multi-media seem to be a better strategy.

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b1daly
I don't where people get this notion that the music business is somehow
"greedy" when the profits and margins are small.

The record companies are not mere "middle-men" between artist and fans. They
actually fund the costly process of creating and marketing music.

For better or worse, we have an economic system grounded in the concept of
intellectual property.

Only with the music business are the producers of a good, who undertake the
production of that good at a ridiculously high risk, branded as "greedy" if
they attempt to sustain a viable business from their efforts.

As far as I'm concerned, Apple, Google, Spotify, Pandora, Amazon and the like
are parasitic "middle-men" who bring a commodity level service to the
industry.

Through quirks of the market structure, they have been able to extract the
bulk of the value from one of our sublime cultural goods, and leave the actual
producers scrambling for crumbs.

If Google thinks it's no big deal, why don't they just undertake the
production of the content that they monetize? They won't, because it's a crap
business, and only exists because the people who create music are at least in
part driven by non-pecuniary rewards.

That's the way it goes, but spare us this attempt to paint this as a morality
tale.

~~~
jpatokal
"Somehow greedy"? I don't think this is really debatable: Steve Albini put the
case succintly in the 1990s, and things haven't really changed from the
musician's point of view. Check out the math here:

[http://www.negativland.com/news/?page_id=17](http://www.negativland.com/news/?page_id=17)

TL;DR: If a record grosses $3 million, making $710,000 in profit, the band
makes _$12,000_ (1.6%), in this case split between three people at that.
Including "salary", since this is their sole payment for working their ass off
for a full year.

~~~
b1daly
I'm familiar with the argument. Courtney Love did a similar article called
Courtney Love Does the Math.

[http://www.salon.com/2000/06/14/love_7/](http://www.salon.com/2000/06/14/love_7/)

The argument is wrong.

I'm generalizing, but more or less here is the issue with record companies.
Only a small number of albums released come close to making a profit. The vast
majority of albums generate very little revenue, and don't even come close to
covering the costs of producing the record.

So the business model of the record company is to fund a bunch of albums in
the hope that one of them becomes a hit, and generates enough revenue to cover
the production and marketing costs of all the others too. Whatever is left
after that is the profit.

The contracts are structured to reflect this reality. i.e. very low royalty
rates, like maybe 10% of the gross sale price per album. From this small
royalty, it doesn't even kick in until the entire costs of the production and
marketing have been "recouped" from this royalty!

The artist has an "account" at the label to keep track of how much they have
recouped to date. Usually the costs hold over from project to project as well,
so the artist can get deeper and deeper in the hole if they release a series
of poor selling records. An artist can wind up a situation where they have a
massive hit, but receive no royalties on sales as they haven't recouped
earlier releases

As an example, let's look at a hypothetical album release. (This model doesn't
apply as much anymore as the role of the album is much smaller in music sales,
but the principle is the same).

let's say the cost of production and marketing the album is one million
dollars, and the artist royalty rate is 50 cents per unit on a wholesale price
of $5 per unit.

That means the artist won't see a penny of royalties on record sales until
they sell two million units. After that they get their 50 cents per unit. The
record label "advances" the funds to make the record to the artist.

While it does look like at first glance like such an agreement is horribly
unfair, and can only be explained as exploitive, this is really the only
viable business model possible if you want to have a business producing and
releasing music.

Why would an artists sign such a contract, with so little hope of making
money. The main reason is that if the record fails to recoup, once the
contract is over they are not personally responsible for the debt. The record
company pools the projects under a business umbrella, which allows the
individual artists to pool the risk.

Here's another way to look at it. If you are an artist under a recording
contract, you are guaranteed access to the capital you need to make an actual
business of being a professional artist under a much less risky structure.

Only a few number of serious musical artist who might be able to fund the
project through sources where profit is only possible if the project is
commercially successful. If you had to, say take out a personal loan for
$500,000 to make and market a record, given that the odds of success are
incredibly low, that would be pretty much insanely risky.

The reality is that most musical artist never come close to creating a viable,
marketable product, as the talent and capital required are too scarce. Even
the few that manage to make a really good product independently do not have
access to the capital and organizational resources to market it properly.

Another factor at play, is that there are other ways of making money as an
artists outside of record royalties. Having a "record deal" gives you much
greater access to those opportunities. For example, there what's called
writer's royalties which are connected to the copyright on the composition,
not the recording. These are not subject to the same agreement, and are paid
on every sales. There are also opportunities for performances, personal
appearances, endorsements, merchandise sales, sales of back catalog, etc...

At a minimum, while you are under contract, if your advance is large enough,
you can also at least cover living expenses.

From the point of view of a record company, here is how the vast majority of
their deals look: They put up a significant chunk of cash, and they take a
virtual total loss on their investment.

There are cases where artists can successfully sell records independently.
Often, this will be an artist who has had significant commercial success in
the past, and who has access to other sources of capital (personal or
otherwise). In such a case, if everything goes well, they can make a profit at
a much lower number of sales, as their business will get the entire wholesale
price of the product as revenue.

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chrismcb
This is the crux of the argument ", the record labels squeezed to death nearly
every upstart that wanted to become a Tower Records" Perhaps if the music
industry had embraced digital 15 years ago instead of crushing it, they would
be in more control today.

~~~
spriggan3
> This is the crux of the argument ", the record labels squeezed to death
> nearly every upstart that wanted to become a Tower Records" Perhaps if the
> music industry had embraced digital 15 years ago instead of crushing it,
> they would be in more control today.

It wouldn't have changed a damn thing. People would still be sharing music for
free today, like they did as soon as the medium allowed it (tapes).

~~~
lostcolony
Sure. But music sharing didn't kill the industry then; there's little reason
to believe it'll be the reason for its death now.

The problem is there is only so much profit to be had. The recording industry
is not interested in trying to sell their own product digitally at a price
consumers want. So instead, either a company is large enough and entrenched
enough (like Google with Youtube) that that company is able to capture the
profit, and the music industry complains, or the company is small enough that
the music industry captures the profit, and the company goes under or operates
at a loss (too many to name, but Spotify and Pandora both fall under this).

There may not be a good split, that sees both the recording company and the
distributor seeing a profit, at the prices consumers are willing to pay, which
if the case explains why they've fought tooth and nail against every form of
digital distribution. But I don't see how the recording companies can stay
afloat without it. It may be we'll have to see how music works without them.

~~~
throwawaykf05
_> But music sharing didn't kill the industry then; there's little reason to
believe it'll be the reason for its death now._

Not a valid extrapolation. The Internet is billions of times faster and more
densely connected than the sneakernet.

~~~
lostcolony
Of course it's faster and more densely connected. And? Extrapolating that
because people shared before, and now they can share BETTER, to "the music
industry is doomed" (or whatever statement you care to make), is what is 'not
a valid extrapolation'. I wasn't extrapolating anything, just saying "this is
not a new behavior", and given no other data, the fact of that behavior is not
in and of itself a death knell.

~~~
throwawaykf05
You said:

 _> Sure. But music sharing didn't kill the industry then; there's little
reason to believe it'll be the reason for its death now. _

To me that translated to: "Sharing some songs between a handful of friends
once every few days didn't harm the music industry; hence being able to share
hundreds of songs with millions of people in a few seconds will harm it now."

The second statement sure looks like an extrapolation from the first, and
given the mind-boggling difference in scale, an invalid one.

As for lack of data, music industry revenues have been decimated since the
turn of the industry. Sure, there are several factors involved, but can you
really pretend the terabytes of copyrighted music being torrented every month
has nothing to do with it?

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kevincox
Although it is probably irrelevant streaming music videos is also the least
cost effective way to stream music. So Google has to take a larger cut of the
profits in order to offset that cost. (With he exception of physical media
possibly)

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EGreg
Google just released a YouTube music player to compete with Apple and Rdio.
Coincidence?

~~~
michaelmachine
Rdio was acquired by Pandora.

~~~
EGreg
Ok point still stands

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wodenokoto
Is Youtube more or less than Radio?

~~~
manmal
Except radio pays artists way more than Youtube. Just look up what one-hit
wonders from the 80s are still earning every year - that's almost 100% radio.

~~~
mattmcknight
In the US, radio royalties only go to the songwriter, not the performer/artist
or recording owner. [http://blog.songtrust.com/publishing-tips-2/what-you-
didnt-k...](http://blog.songtrust.com/publishing-tips-2/what-you-didnt-know-
about-radio-royalties/)

If a radio play goes out to 50,000 listeners, the total paid is less per
listener than YouTube.

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amelius
I don't hear the fashion industry complaining that their creations are being
used in photos and videos posted to youtube. So why should the music industry
complain?

~~~
chrismcb
Because you can't wear a photo of video. The photo of video is simply an ad
for the product, but for music it is the product

~~~
amelius
Ok, but for music it is also an ad for the product.

~~~
yoo1I
Could you elaborate ? It seems to me that music delivered via my speakers is
the product itself.

~~~
toomuchtodo
Music is marketing for a live performance by the performer.

Trent Reznor probably cares more about the thousands of dollars (VIP tickets
via his fan club site) I've paid to see him live over the last decade or so
than the ~$150 I've spent on his albums (with the label taking most of that).

~~~
spriggan3
> Trent Reznor probably cares more about the thousands of dollars (VIP tickets
> via his fan club site) I've paid to see him live over the last decade or so
> than the ~$150 I've spent on his albums (with the label taking most of
> that).

Trent Reznor made millions before the collapse of the music industry in the
2000s THANKS to big labels. It's easy for him not to care about your money, at
all. He'd be nothing if no major label invested in him in the 90's .

~~~
pessimizer
No, he'd be very famous, and probably just as productive. Certainly not rich,
though. He was on TVT records, one of the small labels snorted up by
Interscope, later snorted up by Universal Music Group. He was associated with
the Wax Trax! people, many of whom were extremely prolific, and extremely
successful, and who were snorted up by TVT before they were snorted up by
Interscope before they were snorted up by Universal.

The big labels didn't start anything, they just bought it up.

