We’ve heard a lot about YouTube and the ‘value gap’ from music rightsholders in recent months, but now YouTube is opening up a new line of defence against criticism from the music industry.
Google’s video service has commissioned competition-law specialist RBB Economics to write a series of papers exploring YouTube’s impact on the music industry.
The reports are based on a survey of 1,500 people, as well as analysis of YouTube views and audio streams for around 5,000 tracks in the UK, France, Germany and Italy.
The first paper was published this morning, and focuses on the question of ‘cannibalisation’ – is music consumption on YouTube hampering the growth of higher-value (to the music industry) audio streaming services? It won’t surprise you to hear that the report claims that it is not.
“We conclude that significant cannibalisation by YouTube of other legitimate music channels is unlikely, for two primary reasons,” claims the report. “In the absence of YouTube, most time spent listening to music on YouTube would be lost or shifted to lower value music channels. And in the absence of YouTube, time spent listening to pirated content would increase.”
The paper goes into more detail, claiming that if music was removed from YouTube – a move that at least one major label has seriously considered making for its catalogue in the last year – 85% of the time spent listening to music on YouTube would be “lost or shifted to lower/similar value platforms”, from TV and radio to file-sharing services. This calculation also includes “additional streams by existing audio streaming subscribers” however.
Here’s the graphic that YouTube has put out on that point:
But on piracy: “The results suggest that if YouTube were no longer able to offer music, time spent listening to pirated content would increase by +29%. This is consistent with YouTube being a substitute for pirated content,” claims the report.
There is also a footnote pointing out that “the average YouTube user currently only spends approximately 20 minutes per month listening to pirated content” – so a 29% increase would take that to just under 26 minutes.
The study also takes aim at labels’ claims that blocking songs on YouTube will grow streams on higher-value streaming services, concluding that “tracks that are blocked on YouTube typically do not perform better on streaming platforms than tracks that remain available on YouTube”.
This analysis is based on Germany, where YouTube’s dispute with GEMA provided evidence of the impact of “generalised” blocks on all versions of a song.
“We find no evidence of significant cannibalisation by YouTube of other legitimate music services,” is the report’s parting shot.
We are sure the IFPI and other music rightsholders will have something to say about that. They have been lobbying hard on both sides of the Atlantic for changes to the rules on ‘safe harbours’ for internet services including YouTube, to reduce their leverage when negotiating licensing deals with labels and publishers.
The IFPI’s recent Global Music Report claimed that in 2016, 212 million users of audio music-streaming services generated $3.9bn of revenue for rightsholders, while 900 million music listeners on “user upload video streaming services” generated just $553m.
At the IFPI’s launch event, Universal Music’s digital boss Michael Nash delivered a blunt message to YouTube and legislators mulling safe-harbour reform.
“The scale of this inequality casts a shadow over the entire landscape that cannot be ignored,” said Nash. “The longer this is permitted to continue, the greater the threat to the music ecosystem… The value gap must not be permitted to derail our mission. We have worked too hard to get here.“
IFPI boss Frances Moore hammered home that message. “We have services like Spotify that deliver $20 per user [per year] back to the industry, and UGC services like YouTube are delivering less than a dollar. The artists are losing out, everybody is losing out,” she said.
Moore’s specific criticism will be the focus of RBB Economics’ next YouTube-commissioned report, comparing the growth patterns of video and audio streaming services. Further papers will follow exploring YouTube’s promotional impact on other music services; outlining its value for music fans; and a final paper marshalling the arguments of the previous four.
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