YouTube hits back at ‘noise’ around its music payouts


It’s been a bruising month for YouTube as labels, music industry bodies and artists have attacked Google’s video service over its payouts for music streams, and the safe-harbour legislation that they see as protecting it.

YouTube has been responding with statements over the course of the month, but now its head of international music partnerships Christophe Muller has penned a guest column for the Guardian setting out the company’s case.

Key points include a defence of YouTube’s Content ID system: “Only 0.5% of all music claims are issued manually; we handle the remaining 99.5% with 99.7% accuracy. And today, fan-uploaded content accounts for roughly 50% of the music industry’s revenue from YouTube,” wrote Muller.

He also criticised the attacks that have compared YouTube payouts to Spotify’s, arguing instead that YouTube should be compared to traditional radio.

“The next claim we hear is that we underpay compared to subscription services such as Spotify. But that argument confuses two different services: music subscriptions that cost £10 a month versus ad-supported music videos. It’s like comparing what a black cab driver earns from fares to what they earn showing ads in their taxi.

So let’s try a fair comparison, one between YouTube and radio.

Like radio, YouTube generates the vast majority of its revenue from advertising. Unlike radio, however, we pay the majority of the ad revenue that music earns to the industry. Radio, which accounts for 25% of all music consumption in the US alone and generates $35bn of ad revenue a year, pays nothing to labels and artists in countries like the US. In countries like the UK and France, where radio does pay royalties, we pay a rate at least twice as high.”

The music industry’s criticism has focused on the “value gap” between rocketing music consumption on free, ad-supported, on-demand streaming services (YouTube included) and the revenues being generated by those services. Muller wants to steer that debate in another direction too.

“Instead of talking about a ‘value gap’, we should be focusing on a ‘value shift’. If the ad revenue currently spent on radio instead flowed to online platforms, it would double the current size of the music business,” writes Muller, before suggesting that in contrast to radio, YouTube is “promotion that pays”.

Perhaps the most interesting of Muller’s arguments, though, comes when he tries to walk the line between playing down music’s importance to YouTube as a business, while reassuring the industry that it’s still a priority for the company.

“Despite the billions of views music generates, the average YouTube user spends just one hour watching music on YouTube a month. Compare that to the 55 hours a month the average Spotify subscriber consumes.

“Make no mistake: regardless of the amount of time people spend watching music, we still feel it’s core to YouTube. That’s why we worked with labels to build and implement Content ID. It’s why we created a model that offers promotion that pays – to date, we have paid out more than $3bn to the music industry and that number is growing significantly year-on-year. And it’s why we created a custom YouTube Music app and recently introduced YouTube Red, our own subscription service, so we could drive even more revenue to musicians and songwriters.”

It’s one of the fullest defences YouTube has put forward against the mounting criticism of the role it plays in the music ecosystem, with plenty to chew on for critics and supporters alike. We expect plenty of reaction to Muller’s column in the coming hours and days.

A value shift is one thing, but we’ve noted another trend in all this: a blame shift. Think about Apple Music’s messaging when it launched last year: ‘We’re much better for you than Spotify with their free music’ (to paraphrase). Now think about Spotify’s response to artist criticism (‘We pay out a lot more than YouTube’) and now YouTube’s response to that (‘We pay out a lot more than radio’).

In a nutshell, for all concerned: ‘At least we’re not as bad as them.’ We’ll be interested to see who the ‘them’ is for the radio broadcasters, if and when they are pressed on these issues.

Stuart Dredge

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