“This is about where we are – not we, YouTube, but where the industry is – and how do we move forward? And to me that’s the key: how do we elegantly move forward as we are transitioning from 18 years of decline, where artist development may have gone a little thin?”
Lyor Cohen was fresh off a flight from New York when he met Music Ally this weekend ahead of YouTube Music’s launch in 17 countries. And despite the jet-lag, he had plenty of passion for the potential of YouTube’s new move in to music subscription, as well as some sharp rejoinders for questions about YouTube, safe harbour and the ‘value gap’.
“Now, since the industry is starting to bounce, how do we improve the conditions? How do we actually grow the business and have many more artists and songwriters being able to make a living?” came at the end of the interview, after some spirited exchanges over those historic tensions with the industry.
“The first time I’ve touched this safe-harbour [topic] in quite some time is this morning with you! I don’t hear it. You know the comment I’m getting the most? It’s ‘How could we be helpful? How could we be helpful for you to be successful?’”
But rewind to the start of Music Ally’s conversation with the former Def Jam, Warner Music Group and 300 Entertainment executive, after his YouTube Music colleague T. Jay Fowler had given a demonstration of the new service – you can read that interview here.
“I think that the people at YouTube think that the ad-supported part of the business was helping to solve a very complex part of our [the music industry’s] business. A big, global platform, advertising, basically killed piracy, etc etc,” said Cohen, who switched between using ‘we’ and ‘they’ for both YouTube and the music industry during the interview, reflecting his position between the two worlds.
“And I think they recently realised that it’s not mutually exclusive. They could be really great in providing a great advertising experience, but also great at building a subscription service.”
“The consumer should have a choice: some consumers are happy paying with their eyeballs [via ads] and others are going to want the benefits of what the subscription service is… The aha moment for Google is that they’re of course great for people paying with their eyeballs. But they don’t have to be just great at that.”
Cohen also sees this ‘aha moment’ as being about YouTube getting close to the music industry, and listening to rightsholders’ desires that the company make a proper move into subscriptions, to sit alongside its ad-supported service.
Do rightsholders believe that YouTube’s heart is in this move? Privately, some label executives still worry that – despite their respect for Cohen and his team’s motivations – higher up the Google ranks, YouTube Music Premium might be more about distracting policymakers from that long-running debate about safe harbours and the value gap.
“Anybody who is thinking about that is stuck on a whole different era,” said Cohen. “You know what? I’ve been here now for a year and four months, and probably the first six to eight months, I heard only that. I haven’t heard that at all [since]. I’m not hearing that at all.”
He cites the RIAA’s recent announcement of 2017 recorded-music revenues in the US as an example. “Look at that last report. You won’t find YouTUbe in there. You won’t find YouTube in that last report,” he said.
“In fact, I bumped in to [RIAA boss] Cary Sherman a few days ago at the Daniel Ek and Troy Carter honouring at the UJA, and he came over to me and said ‘The industry is so hopeful and so excited for what you’re doing, for your launch. I’m only hearing incredible feedback from the labels’. I’m not making that up!”
“I’m certain you could find them [people talking about the ‘value gap’] but they’re not finding me now. And they were in my face. Those were beautiful words, right? ‘Value gap’. But the reality is that as YouTube develops, as it becomes more and more sophisticated in advertising, and then also layering on a subscription service, I don’t think that you will hear that.”
There is more to this picture, unsurprisingly. It’s true that the RIAA didn’t mention YouTube and the ‘value gap’ in its report, but Sherman did refer to it in his blog post accompanying the release of the figures.
“The playing field remains unfairly tilted at the expense of creators and digital music services, resulting in a “value gap,” the gulf between the amount of music being consumed and the compensation that platforms return to music creators for exploiting the music,” wrote Sherman, who included a quote from University of Texas professor Stan Liebowitz explicitly mentioning YouTube as a beneficiary of safe harbour.
At the same time, it’s also no surprise that music labels have moved on from sending executives in to shout at Cohen about the ‘value gap’ – the music industry sees no contradiction in working constructively with Cohen and his team on YouTube’s new service, while leaving the safe-harbour lobbying to industry bodies like the IFPI (which made the ‘value gap’ a key section of its latest report).
Labels see no contradiction between lobbying for safe-harbour reform and working with YouTube Music as a partner, then. Hence the lack of execs getting in Cohen’s face about the ‘value gap’, although he stressed that YouTube has worked hard to win hearts and minds in the industry.
“They’re starting to sense that we really do want to work closely with the industry, and improve not the relationship – because the relationship’s already good now – but to improve our products that make their jobs easier,” he said.
“There used to be a period of time, which you’re referring to, in which we were a very dealmaking, deal-centric organisation that came and made a deal, then went back to San Francisco, and you never heard from them till the deals were up.”
“When that happens, there is a lot of mistrust, or lack of cadence. That’s not happening any more. T. Jay is in the offices of executives, and the people who are in charge of understanding data, so that we can build analytics tools that they can actually use and are actionable… Suddenly we get to listen to the industry about what are the things that they need?”
Cohen cited YouTube’s recently-launched ‘Official Artist Channels’; its revamp of its global and local charts; and its addition of songwriter and publisher credits as other examples of YouTube listening, then acting on the industry’s needs.
“And you want to jump back to the value gap?” he said, before dismissing any suggestion that this should be seen as a ‘charm offensive’ by YouTube towards the music industry.
“It’s not a charm offensive. It’s actually understanding your customer. What’s a charm offensive? A charm offensive’s a bunch of dancing around. This is actually: we have customers that are valuable to us, and we have to listen to them!” he said.
“We haven’t listened to them in the past because all we wanted to do was get contracts. but now we want to understand what’s important to them, and work with them. It’s a very cynical point of view: this whole ‘charm offensive’ or the value-gap stuff you’re talking about.”
Cohen’s decision to join YouTube shocked some people in the music industry, including those who had worked with him at Warner Music and heard some of his sometimes-spirited views on how YouTube interacted with the industry. Not that he’s hiding this aspect of his past.
“I understood from my own experience that there was no real way in to YouTube. there was really no way in. They made a deal with my record company, and my record company that I started was important to me, but I had no way of talking to people and actually making my job easier,” he said.
“Signing an act and breaking an act is almost impossible, and then when they have this big, global platform that could actually help make your lives easier as a record creative business, to me there are some simple things like being able to have conversations, and surface some of the important parts of my business. And there’s a lot of willingness to do that now.”
Cohen’s portrayal of the YouTube of 2018 is of an organisation more than willing to listen to labels, publishers, artists and managers. Within weeks of his arrival, Fowler found himself sitting in a meeting with Atlantic Records boss Julie Greenwald, listening to her views on ‘here’s what you’ve got to get right’.
“Those were voices, in previous iterations of YouTube, that weren’t in the room. we were dealing with corporate-centre contract negotiations, not about the people that were actually behind the artists,” said Fowler.
Cohen is already on record as suggesting that YouTube can also help the music industry gain ‘diversity of distribution’ beyond the current crop of globally-popular streaming services. He used an interesting comparison to illustrate this: Hollywood in the 1930s, whose contracts with its talent he thinks weren’t so different to those the music industry has with its artists now.
“The argument for those contracts is that one act will be successful for nine failures, and that one act has to pay for all of the failures, and the costs of capital, and the people etc etc. And since you don’t know which of the ten are going to be the broken act, the very tough contracts that resemble those in the thirties [in Hollywood] have to apply to all ten acts,” he said.
“If the batting average could go higher, and the costs of your losses go lower, suddenly the contracts could get – and that’s what’s happening right now – that they don’t have to have these type of contracts that we had one iteration ago.”
“Data isn’t just to sniff out and help a company identify the hits, but also to identify things that aren’t moving the needle. So helping independents, majors, artists understand how a record is actually working may make them rethink their investment at radio, on videos, who knows?”
“We’re starting to see a lot of artists putting records out and watching to see which one starts getting traction, and then making their investment behind that certain song. So that’s incredibly helpful to reshaping what used to be ‘one for ten’ to be much higher, for the losses to be much lower, and that gives the ability to have less onerous, I think, fundamental contracts.”
Is another lesson from 1930s Hollywood that the studios controlled distribution (and, in cinemas, exhibition) whereas in the modern music industry, the labels have lost control of distribution?
“I don’t know why it has to be framed again as lost control,” said Cohen. “Lost control of distribution? Global distribution, especially in capturing eyeballs in advertisements, is complex and difficult. Signing and breaking acts is really really difficult.”
“So to me, I think that the labels don’t have to control distribution to be really really prosperous – but what they do need is diversity in distribution. If they could have diversity in distribution, the value will creep back to the creators, and distribution in its own right will be very cost efficient. And that’s the key. That’s why I took this gig.”
Now read our interview with Cohen’s colleague T. Jay Fowler on how YouTube Music intends to differentiate itself from the streaming competition.
Music Ally’s Eamonn Forde also contributed to this interview
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