2020 is seemingly the year Music Ally has to abandon our traditional statistical snark when reporting on big technology companies’ financials. First Amazon nixed our usual ‘Amazon didn’t offer any meaningful music numbers’ phrase by releasing some meaningful music numbers, and now Alphabet has consigned our ‘Alphabet didn’t break out YouTube’s financials’ sentence to the history books too.
Alphabet DID break out YouTube’s financials yesterday, in its latest quarterly financial results. “YouTube reached $15bn in ads revenues in 2019, growing at 36% compared with 2018, and it now has over 20 million Music and Premium paid subscribers and over two million YouTube TV paid subscribers, ending 2019 at a $3bn annual run rate in YouTube subscriptions and other non-advertising revenues,” said CEO Sundar Pichai, during the company’s earnings call.
As one analyst pointed out, if YouTube has around two billion users overall, that’s advertising revenue of around $7-$8 per user. Pichai didn’t disagree with that summary, and suggested that “there is more room, significantly more room, over the mid to long term on monetisation levels, and so I think we see that as a big opportunity and are investing for it”.
Alphabet’s financials broke out the last three years of YouTube advertising revenues, not just 2019. The service generated $8.15bn in 2017, which grew by 37% to $11.16bn in 2018, and then by 36% to $15.15bn in 2019. To put that into perspective, Google’s ‘search and other’ ad revenues were $98.12bn in 2019, but their year-on-year growth was 15%.
The $15bn of annual revenues is the figure music industry bodies and rightsholders will be factoring in to their ‘value gap’ lobbying and their licensing negotiations, but it’s worth thinking about the 20 million YouTube Music and YouTube Premium (which includes YouTube Music) paid subscribers stat too.
Yes, it’s a drop in the ocean of those two billion users, and it’s not much more than a third of Amazon’s music subscribers, let alone Apple Music and Spotify. But the positive question is how YouTube plans to pull more levers to continue growing its subscriber total, especially in territories like India, Latin America and Africa.