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July 15, 2016

Maybe YouTube Isn’t Music’s Boogie Man After All

YouTube logoArtists, bands and record labels have issued an all-out assault on YouTube this year over a variety of issues that mostly stem from what they consider to be low royalty payouts. The problem is, while it’s likely that many of the presumptions leading to the attacks have a basis in reality, their conclusions may be premature.

In the music industry’s eyes, YouTube is a devil that it’s forced to deal with. The service is widely used to market it’s product while throwing off enough revenue that it can’t be easily dismissed, yet YouTube is in a position of strength where the labels can’t easily use their licensing leverage to get their way as they could with other streaming service negotiations in the past. What seems to be true is that content owners are receiving a lower royalty rate for every video view than ever before. In fact, industry analyst Mark Mulligan reports that the per view rate was actually cut in half from 2014 to 2015, and is now down to around $0.001. That said, YouTube continues to pay the industry more money than ever, with almost $2 billion in payments since 2014.

While that may be true, the fact of the matter is that YouTube isn’t nearly as powerful as it once was, and indications are that its popularity for music delivery is waning. According to a recent BuzzAngle report that looked at music consumption from the beginning of the year, for the first time streaming actually outpaced music video views, with the number of streams at 114 billion and video views at around 97 billion.

What’s more, according to the GlobalWebIndex study, young people between 16 to 24 (the traditional driver for video views) are more willing to pay for streaming than older adults, despite indications that only 1 in 10 digital consumers end up paying for streaming music overall. This figure for younger Americans could actually be higher though, since pre-teens and teens don’t usually have credit cards. Many ask their parents to pay for the subscription or are part of a parent’s family streaming plan, so the complete picture here is still a question mark. When you take that into consideration, there may be more young people in that subscriber category than you might think.

Google has certainly taken notice to these numbers and is attempting to increase it’s own music subscriptions by running a sale. First of all, a free 2 month trial period for Google Play is now available that includes its YouTube Red service as well, and Red alone is being offered for just $0.99 for the first three months through the YouTube app. A company running aggressive sales campaigns is reacting to the market, and Google sees the writing on the wall. YouTube is falling out of favor with the demographic that, at least up until now, consumes it the most. [Read more on Forbes…]

(Photo: Rego Korosi via Flickr)

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