YouTube Exploiting the Value Gap in Music Streaming Industry

1st Apr 2017

Last week the UK music industry announced that its artists earned less from YouTube pay-outs in 2016 than they did from vinyl sales, which received a boost from the late, great David Bowie’s final album, Blackstar.

The BPI revealed figures that suggested that YouTube, a Google subsidiary, made the larger portion of the £10bn that was spent on internet marketing in the UK, and directed just £25.5million to the music industry, and subsequently, the artists themselves.

YouTube pay one seventh of rates other music video streaming services pay

The music video streaming industry is largely dominated by YouTube, who pay approximately ‘one seventh of the rates other streaming services pay,’ according to band manager Allen Kovac. ‘Moreover,’ he says, ‘Google drives audiences to YouTube, which devalues artists’ music. That’s a win-win for them, but a colossal loser for artists.’

In its defence, YouTube claims that it generated more than $1bn for the global music industry last year from its advertising, and whom it describes as ‘light users’ that would not usually or otherwise subscribe to a music video streaming channel.

The worldwide global recording industry body, the IFPI, calculates that YouTube, with 800 million users is paying an average of just $1 per user annually, which is significantly lower than other music video streaming services, such as Apple or Spotify.

As streaming services are predicted to outweigh record sales again this year, with 2016 figures showing a 5.6% increase to £926 million, the BPI suggest that profits for the record industry could reach more than £1bn if the revenue was more fairly distributed.

The BPI accept that these figures could suggest that more people are choosing premium, paid music video streaming services, but the argument still exists that streaming platforms should pay fair rates ‘for the music they benefit so much from.’

During 2016, the European Commission made a proposal to place the same copyright terms on YouTube as other streaming services – a motion that will be voted upon this year, and has since been heavily contested by YouTube.

 

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