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Google-Funded Study Touting YouTube Boost to the Music Business Deemed Misleading by RIAA

Robert Kyncl Youtube
(AP Photo/Danny Moloshok

A Google-funded study that touts positive impact of YouTube on the music industry is raising hackles, with the Recording Industry Association of America (RIAA) characterizing the study as misleading and out of touch. The study, by the London-based RBB Economics, studies user patterns in Europe, assessing whether the overall YouTube impact spurs more business or cannibalizes paid sales. “The RBB study tries very hard to show that YouTube is really good for artists, even if they don’t know it. But it isn’t for YouTube to tell artists what’s good for them, or how they should promote their music,” the RIAA said in a statement to Variety. “That’s for artists and their business partners to decide.”

Drawing particular criticism are stats that tout YouTube’s beneficial effect on boosting other paid services, referred to in the study as “a significant promotional effect.” The study advances theories that “paid streaming rises where YouTube views rise, with views rising first, spilling over to a noticeable rise in streams.” A country-by-country assessment of this uptick reveals a range of 12-142% increase depending on country, with Germany at the high end. “Tracks with higher initial exposure on YouTube achieve higher streams on paid services like Spotify and Apple Music in subsequent months, compared with new releases that had lower initial exposure on YouTube,” the study claims, noting the benefits exist across geographies and age ranges and music types.

The RIAA characterizes as “astounding” the RBB report claims that artists benefit from, for example, higher audio streams on other music services when YouTube views are higher. “Do they truly believe that it’s okay for YouTube to pay only miniscule royalties because artists will make more from services like Apple and Spotify?  The RBB study ignores the fundamental issue – that YouTube is failing to pay fair market value for the music they’re using.  Music creators want to make their music available on YouTube.  They just want to be paid fairly for doing so,” the industry group continued.

Major label veteran Lyor Cohen joined YouTube in Sept. 2016 as its global head of music, reporting into YouTube’s Chief Business Officer Robert Kyncl.

The 109-page study details many positive findings, and virtually no downside to YouTube for those with commercial interests in music, basically presenting YouTube as the ideal partner for marketing and monetizing songs. Given that the whole “value gap” proposition is raging white-hot in Europe – with purveyors of music arguing that their content provides value to tech companies disproportionate to the financial returns to labels and artists, and arguing for regulatory intervention to even the playing field. The report, touted on a May 11 post on a Google blog by a company public policy manager under the heading “What is YouTube’s Value in the Music Industry?,” is a clear attempt to bolster YouTube’s position in that value-gap debate, something label executives as well as trade groups representing the creative side contest.

Other noteworthy excerpts from the RBB study:

  • Tracks that are less popular on streaming platforms are over-represented on YouTube. Some 76-93% of YouTube views are for tracks outside the top 3,500, compared with 55-65% of audio streams. YouTube also provides heavier exposure for tracks older than 6 months — the share of YouTube views from tracks older than 6 months is 10% higher than it is on streaming platforms.
  • YouTube helps users to find and rediscover older music — nearly 40% of the views of older music are driven by YouTube recommendations. This number shifts to 85% when playlists like YouTube mix (an algorithm-generated playlist based on music a user has listened to) or third-party created playlists, are included.
  • User generated content — like a lip sync, wedding, or parody video — drives new revenue streams for the music industry. User generated content allows for social engagement, increased artist visibility among fans, and user self-expression. User generated content helps maintain interest and popularity over time, increasing with a track’s age – from 8% of total views for tracks less than 3 months old increasing to 26% of views for those older than 18 months – and sustaining views of a track over a longer period.
  • Non-YouTube users discover music primarily on radio while users of music on YouTube discover music primarily through YouTube. YouTube provides 10-15x the value to the music industry per view or listen than on radio. As advertising revenue shifts from Radio and other forms of traditional media to online services like YouTube, the music industry will generate even more revenue from ads.
  • 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, which thus adds value to the music industry.
  • There is no evidence that YouTube takes away revenue from the music industry, nor that the industry would be better off without YouTube.  Streaming continues to grow rapidly (4-10x from 2014 to mid-2016) and, in most markets, faster than YouTube. Regardless of YouTube’s health, the streaming market continues to grow rapidly.
  • Blocking tracks on YouTube does not positively affect streams. Econometric tests show that blocking tracks on YouTube does not have a positive impact in the consumption of audio streams in the corresponding weeks. As context, YouTube’s ContentID system allows for various level of controls for rightholders including tracking, monetizing and blocking content on YouTube.
  • Without YouTube, 85% of time spent listening on YouTube would be lost or shifted to lower / similar value channels like TV, AM/FM radio, Internet radio. This loss would be a negative for the music industry and in particular consumers. The shift to lower/similar value channels includes a potential increase in file sharing/ piracy (+29% in the total hours of listening time without YouTube).

In short, the study concludes: “YouTube adds incremental value to the industry” and “also provides tremendous value to consumers.”