YouTube music boss Lyor Cohen has been winding up rightsholders recently with his views on why the ‘value gap’ debate is overblown. But amidst this controversy, it’s easy to forget that some music executives see YouTube as the industry’s biggest opportunity rather than its greatest menace.
Speaking at Paris Electronic Week, Luke Hood, founder and director of UKF, which is now part of AEI Media, outlined the case for the defence.
He is a true YouTube native, setting up UKF when he was just 16 “as a bedroom hobby” and quickly finding it had built a hugely engaged community. In the nine years since its founding, it has grown to have 10 million subscribers [across its four channels] while the affiliated NoCopyrightSounds (NCS) as a channel has 12.8 million subscribers and dives over 100m views a month.
Hood’s view in short: that musicians and music brands should be making their own luck on YouTube rather than simply demanding that the service pay higher royalties. Indeed, he thinks this approach stands for most digital music services.
“Some record labels, to this day, might have a song they think is brilliant but they don’t have an audience to market it to and they just put it on Spotify and presume that it should be reacting and it should go on all these playlists, it should go on radio, it should go on TV,” he said. “In reality, for most songs these days you need to have your own fanbase and audience that you market to initially to see how it reacts.”
Hood added, “If a track is hot on YouTube, Spotify or Radio 1 might look into it more and you might start getting support whereas initially they might not have been interested.”
For him, it all starts and ends with the community, something he sees as seriously lacking in rival platforms – which is why YouTube will continue to hold the whip hand.
“I don’t see a huge amount of community on Vevo,” he suggested. “On YouTube as a whole, one person might appear in the comments of 10 different channels and the commenters all chat to each other. It is this community of people who get along. You are building a loyal following, while on the Calvin Harris Vevo channel, say, you are not getting that sense of community where people buy into it and feel a part of something.”
This is why NCS took off, he believes. On the UGC side, gamers and others uploading videos who wanted to add music did so either at the cost of losing the monetisation of their videos (handing it over to labels and publishers) or at the risk of having copyright strikes against their account.
“NCS filled that void by proving high-quality music for them to be able to use and that wasn’t production library music,” said Hood, citing the example of Alan Walker’s ‘Faded’, which started on No Copyright Sounds, but now has 1.2bn views of its official video.
Originally, any YouTuber could use the track for free as long as they agreed to link back to the original upload. Hood’s view is that unshackling the track from copyright restraints is what gave it its viral power and, while many of the UGC incarnations went unmonetised, it still drove considerable plays of the monetised version on YouTube as well as powering off-platform streams on Spotify (now on 717m plays) and Apple Music once Sony Music picked up the track for a rerecording and new release.
If a major had the Alan Walker track from the off, how would they have treated it differently?
“I don’t think it would have got the traction in the first place,” said Hood, bluntly. “Purely on the basis that no vloggers would have been able to use that song. Alan Walker still talks about the YouTube community. It’s a big part of him and his brand. If it had gone out on Universal, they would have just blocked all the [UGC] videos. It wouldn’t have gone anywhere.”
Hood also talked about the changing YouTube ecosystem, suggesting that multi-channel networks (MCNs) are seeing their power and influence as brokers and mediators crumble. Within this, YouTube is empowering individual creators more than before to the extent that they do not need third-parties like MCNs to boost their content.
“I feel the era of the MCN is behind us,” proposed Hood. “Unless you are producing animated content and you go to an MCN that has links with TV networks or they have a merchandising arm, then they can help [you]. MCNs used to be important because that was how a lot of people who were 16 or 17 were able to monetise their videos on YouTube. If you joined a network, you were then able to monetise [with the MCN acting as a broker]. Now YouTube has put its ship in order and you could set up a channel and by the next day be monetising it. So really the only reason people go to MCNs these days is if they have a value add – like helping with merchandise or getting a TV show.”
But back to the ‘value gap’ debate, with YouTube’s critics accusing the service of not paying copyright owners and creators enough. Hood argued that the real value of YouTube is beyond its per-stream micropayments.
“In some sense, you could argue they might have a point,” he said of calls by labels and publishers for YouTube to pay out more. “I would disagree purely on the basis that we don’t pay a penny to reach our subscribers. On Facebook, we have to have a marketing budget of tens of thousands [of pounds] to market to our fans who have actively liked us. But YouTube is free, we are getting paid for it and we are selling out our shows and selling albums. We are getting paid to be able to market our content. I don’t see what the argument is.”
Hood added that YouTube has created huge opportunities for the brand that no one else could. “We have a festival stage in India – a market where Spotify does not exist,” he said. “Without YouTube, we wouldn’t have a festival stage in India. We are now starting to be able to break into emerging markets that way.”
That said, Hood is not blind to the limitations of the platform and feels there are still areas of improvement that could be made.
“Don’t get me wrong, we would love to be paid more from the platform; but as a platform, it works really well for us,” he argued. “We’d love Spotify to give us more money. We’d love Apple Music to give us more money. I think it’s about making the best of what you’ve got, being smart about it and treating each platform individually rather than bulking everything together.”
Where does he feel YouTube could be improved beyond the monetisation issue?
“At the moment, YouTube is a platform where you do have to fend for yourself,” said Hood. “You start a channel and build it. But there is no magic curator on YouTube that will suddenly put your channel in front of 1m people. It is all completely automated. A bit more curation would be nice. They used to have that eight or nine years ago but then that all went. I don’t know why. But I think that’s what YouTube needs to make it [better].”
Hood also felt that, despite criticising Vevo for its inferior community aspects, YouTube could learn from it.
“If you look on a Vevo video on the bottom left, you get cards – maybe four different cards that pop up for different video recommendations you can click on,” he said. “So they might market four different videos while you are watching one video. I think this should be possible on YouTube.”
While YouTube has not made its numbers public for Red, its subscriber offering, Hood suggested that it is rising and proving its commercial worth to creators.
“YouTube Red is growing rapidly and for us is becoming a bigger and bigger part of our YouTube pie,” he said. “It’s only in a few territories at the moment but we would be lost without it.”