YouTube MarketingHow YouTube could be the Next Napster

Akshay Chandra4 years ago

Gone were the days when people would hear a tune they liked on the radio, then go to a shop and buy the physical recording of it. From gatefold covers for albums like on “Sgt. Pepper’s Lonely Hearts Club Band” to cassettes and their cut-out lyric inserts, it was fun when we used to hunt for a record from store to store. As the technology prevails, this same process got fragmented into different music platforms such as Napster, YouTube, Spotify, iTunes, Sound Cloud and many more.

Just 15 years ago, we accepted Napster as our first digital music platform, which introduced computer users to the idea that they could listen to any song in the universe, anytime, on demand. The only problem was that it cannot payout to the music artists (the people who made that music) as they wanted to be paid for it.1

From leaking Metallica’s “I Disappear,”(which was being distributed before it was officially released (2000)), to the cover of Time Magazine; Napster did it all before shutting its operations in 2001.

Thanks to the Superbowl event where Janet Jackson had her famous Wardrobe malfunction, made Jawed Karim wonder all the possible ways to get the footage. This gave the birth to YouTube’s existence with a goal to be the home for every user generated content including music. Now, YouTube has over a third of the entire population of the Internet as users. And unlike NAPSTER, the user generated content helped YouTube to gain popularity among young millennials.

But, YouTube is also a platform with unlimited music; which is FREE for everyone.  In 2015, everyday over 81715 music channels on YouTube uploaded 13,445 thousand videos generating more than 1 billion views.  Out of those views, millions subscribe YouTube channels everyday. Recently, the very same ecosystem of YouTube music has been under fire and controversy.

This article focuses on Nikki Sixx’s allegations of Google’s “Safe Harbour Laws” (Which protects them from copyright infringement prosecutions as long as they remove any copyrighted material when notified by the rights owners), while briefing upon few Open Letters from industry leaders then summing up with the Napster’s situation.

What is the controversy?

In the month of March (2016), more than 100 artists and managers filed petitions asking the U.S. Copyright Office to amend parts of the 1998 Digital Millennium Copyright Act. Artists like Katy Perry, Billy Joel, Rod Stewart, Lionel Richie, Deadmau5, Christina Aguilera, Sixx:AM, Nelly Furtado, Irving Azoff,  Maria Schneider is among celebrities who spoke openly about this issue.

“YouTube, they’re the devil,” [Mensch] told a BBC Radio 4 documentary on the music business. “We don’t get paid at all. – (Metallica Co-Manager)

This moment gained momentum when Mötley Crüe co-founder Nikki Sixx ramped up his campaign to get YouTube to pay better royalties to artists by writing (F.B post)  and accusing the Google-owned video-sharing site of stonewalling musicians in negotiations.

The band’s statement can be read in full on the Facebook post included below, but here are some highlights:

This is an important issue to us. We are the lucky ones, like so many 
veteran artists, who came up in an era where there was much more income 
from record sales. Today, streaming is a fraction of income from that time.
This is not about us. We are speaking up for the current and future 
generation of musicians who must be compensated fairly for their hard work.
We would not have had Prince, Blondie, Bruce Springsteen, Ice Cube, Taylor
Swift, or many other artists without a system to support and nurture them.

We support technology and its ability to bring music to more people around 
the globe. All we ask is for ALL artists to receive fair pay. When Google 
first started, its corporate motto was “Don’t Be Evil.” That motto has 
since changed to “Do The Right Thing.” It’s time to live up to your 
corporate mottos, Google, and YouTube, and invest in the future of music.

In response to these claims, Christopher Muller, head of YouTube International Music Partnerships, wrote a blog post on the YouTube-owned Creator’s Blog. We highlighted a few important points, though, but you can check the complete blog HERE.

Radio Vs YouTube ad sales
Radio, which accounts for 25 percent of all music consumption in the US
alone and generates $35 billion of ad revenue a year, pays nothing to labels
and artists in countries like the U.S.

Analytics
YouTube also gives artists data they can use to plan tours, land press and 
even secure record deals. We believe that transparency is critical to 
ensuring the music industry works for artists.

Revenue Model
The final claim that the industry makes is that music is core to YouTube’s
popularity. 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

Support for Content ID
We are working with labels and publishers to build and implement Content 
ID. It’s why we created a model that offers the promotion that pays—to date,
we have paid out over $3 billion to the music industry and that number is 
growing significantly year-on-year.
In 2014, Taylor Swift announced on Tumblr that her album 1989 will not be available via Apple’s streaming service, Apple Music because the software giant has basically demanded that record labels foot the bill for its launch

Canadian singer-songwriter and independent artist Nelly Furtado supported Nikki Sixx’s campaign after the death of Prince – who opposed YouTube’s style of distributing music.  Here are the highlights of the important points that Nelly made in the Open Letter.

1. YouTube needs to use its Content ID system in a more productive way.

2. In 2014, YouTube paid out approximately $0.72 per user per year to record
companies, while in 2013 Spotify paid out $20 per user.  Just pay the creators
of all this intellectual property properly, YouTube – we all know you can 
afford to.

3. It is ludicrous to compare Google/YouTube to radio. Radio is programmed
analogue streaming. You can’t turn on the radio and choose any song in the 
world and instantly hear it.

4. Even Pandora, a service that programmes music like radio (not on-demand 
music like YouTube), and is also largely ad-supported, pays around twice as
 much to artists and labels as YouTube does.

YouTuber Hank Green took a hold of Irving Azoff’s open letter posted on RECODE and tried to give a Youtubers perspective on this whole situation. In his letter, these are the points he highlighted,

Ø  If you don’t want your song on YouTube, upload it into the Content ID 
database and issue a blanket takedown for all videos using that song.

Ø  Fan-made videos that cost labels nothing to produce provide not just marketing,
 but more than 50 percent of that $3 billion.

Ø  YouTube is protecting independent creators who have built their livelihood
on its platform with intelligent content.

Ø  YouTube isn’t "hiding behind" DMCA safe harbor. It isn’t a loophole,
it’s a law. It was designed to protect companies from overzealous litigation,
and it’s doing exactly that.

Ø  They’ve been given a new 10-figure revenue stream of claimed fan creations
that they would never have had without YouTube.

Ø  Labels have been given all of the control the law requires and more.
They’ve been given the lion’s share of revenue generated by YouTube Red.

Maria Schneider, a five-time GRAMMY-winning composer and bandleader, a board member of the Council of Music Creators posted an Open Letter in an answer to Hank Green’s answer to Irving Azoff.

I appreciate YouTube’s illegal business model might yield a few anecdotal success stories like Mr. Green’s and his videos of opening beer bottles with antlers, but for the vast majority of the artistic community, including me, and every musician I know (and I know thousands), YouTube is a resounding disaster.

Here is what Schneider pointed out,

Ø  YouTube allows infringers to “monetize” illegally uploaded work, encouraging 
a culture of piracy

Ø  YouTube has created technologies that allow lightning fast uploads of full 
tracks and albums, with no questions asked of the uploader, with no 
checkpoints of any kind.

Ø  YouTube is using Content ID to make users feel good about them as they 
upload work that they don’t own.

Ø  This public demonization of creators, contrasted by the protection of 
the user, is unbalanced and empowers the user to feel they are on the right.

Ø  YouTube turns a blind eye to beyond-obvious-infringement, and users know 
that YouTube purposely looks the other way.

Ø  You can’t join Content ID, unless you offer up your whole catalogue for
 monetization, in order to get the benefit of the technology.

There were many other points that deteriorate the whole conception of how the music industry feels about YouTube. Nikki Sixx wrote another Open Letter states that the lack of action has hit a sour note with musicians. So, they are RENEWING THEIR PROTESTS and taking the issue into own hands. Here is the final preview of what this FUZZ is all about,

  • YouTube unfairly pays artists and labels an estimated 1/6 of what its competitors, Spotify and Apple pay.
  • Recent data revealed that vinyl sales contribute more to the music industry than advert funded streaming services, a market which YouTube dominates.
  • YouTube claims to have paid $3 billion to the music industry to date. Spotify contributed $1 billion alone in 2015 according to the IFPI and while Spotify pays $18 per user per year, YouTube pays less than $1
  • Even these funds are released only if the artist has a deal with YouTube, but unlike other services, the artist cannot choose whether they are on YouTube or not. Much of their material has already been illegally uploaded.
  • Artists are faced with a choice: Either license content to YouTube for a fraction of what should be paid and enjoy limited protection from YouTube’s content ID systems or be forced to issue takedown notices for every single infringement on the system. This disproportionately affects independent and new artists who have their copyrights illegally exploited for free and cannot make a living from the music they create.
  • YouTube makes a big show of offering to pay legal fees for users wrongly hit with ‘take down’ orders while offering no protection to the vast majority of artists whose material is illegally uploaded.
  • The antiquated Safe Harbor provision of the Digital Millennium Copyright Act (DMCA) allows YouTube to operate in this way, protected from prosecution for illegal uploads while basing its business model on them
  • The total 2015 revenue of Google was $75 billion. The total annual revenue of the global music business, in comparison, is less than $15 billion. And yet the music is the biggest driver of YouTube’s business – 82% of users are on YouTube to access music (IFPI). Google makes money from selling its users’ data to advertisers including those consuming music on YouTube.

Considering all the reasons why NAPSTER failed, I think YouTube is heading in that direction. Well, back then, this is what music artists thought about Napster;

“If we are going to sell our music on the Internet, in whatever way we so choose, we cannot do that if the guy next door is giving it away for free.”—Lars Ulrich, Metallica drummer
“Fuck Napster!”—Dr. Dre

Remember, even Napster launched their Premium services after immense pressure from RIAA. It was the company that rocked the Web eventually disintegrated quietly.

But, to everyone who doesn’t know the fact that YouTube is reporting on monetized views or the views that generated revenue due to the placement of an advertisement.

This is important to understand because not all views are monetized, and the decision to monetize is not solely left to music publishers. Finally, the video is not considered monetized until it has been claimed by the relevant rights-holders; delays or disputes could render a certain period of viewership as being ineligible for monetization.

All rights-holders essentially have “veto power.” If any one of the multiple rights-holders of the masters, composition, or audio-visual assets decline to authorize monetization, then no ads will appear and no royalties will be earned.

So, what do you think whether YouTube should continue with what they are doing or should change the guidelines of above mentioned artists?

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Akshay Chandra

Being an artist, movie buff and a media enthusiast, content writing is my career train. I am a proud alumni of Symbiosis Institute of Media Communication (Pune) and currently working for Vidooly.