Music Labels Say YouTube Is Flat-Out Lying About Its $1 Billion Payout

lies

Google and YouTube: We paid out the music industry $1 billion. IFPI: No, you didn’t.

Google announced on Tuesday that YouTube paid the music industry over $1 billion in advertising revenue alone in 2016.  Chief Business Officer Robert Kyncl stated that this payout “[demonstrates] that multiple experiences and models are succeeding alongside each other.”

That sounds all well and good. There’s just one problem: the IFPI doesn’t agree. Showcasing YouTube’s economic contribution to the music industry, Kyncl stated,

As more advertising dollars shift from TV, radio and print to online services, the music industry will generate even more revenue from ads. In the future, the music business has an opportunity to look a lot like television, where subscriptions and advertising contribute roughly equal amounts of revenue, bolstered by digital and physical sales. To achieve this, there is a lot of work that must be done by YouTube and the industry as a whole, but we are excited to see the momentum.”

Vivien Lewit, a former music industry lawyer, told the Sydney Morning Herald,

My priority from day one has been partnering and collaborating with labels and artists to support the success of their artists on and off our platform.

Vivien Lewit joined YouTube in 2011.

However, the IFPI claims the Google-owned video site released “unexplained,” and thus, incorrect numbers.  They argued the streaming video site pays an unfair rate, better known as the “value gap,” under existing law.

IFPI further states that the streaming video site is not the market leader.  In fact, they only generated just over $1 per user in 2016. Google’s streaming service supposedly says 800 million music users worldwide.  The IFPI wrote, directly attacking the service,

This pales in comparison to the revenue generated by other services, ranging from Apple to Deezer to Spotify.

In addition, Spotify paid record labels $2 billion.  YouTube, however, only earns $1 whereas Spotify earns a whopping $18 per user.  Labels say that YouTube can simply allow users to upload music and place ads alongside “pirated” content.  YouTube pays nothing yet earns revenue in advertising, a win-win for YouTube.

The IFPI statement attacking YouTube’s false claims ended saying,

YouTube, the world’s largest on-demand music service, is not paying artists and producers anything like a fair rate for music. This highlights more than ever the need for legislative action to address the “value gap” that is denying music rights holders a fair return for their work.

YouTube directly didn’t comment on this matter, directing the press to Kyncl’s original statement.

To achieve this, there is a lot of work that must be done by YouTube and the industry as a whole, but we are excited to see the momentum.”

20 Responses

  1. Avatar
    Anonymous

    When you pay advertising revenue to copyright owners for the use of pirated content, it doesn’t change the fact that it is pirated content that should not have been made available on the site in the first place. We’ll need DMCA reform to fix this.

    Reply
    • Avatar
      Someone Who Actually Understands

      Um….

      When you pay copyright owners for the use of content, it is NOT pirated content, moron.

      Radio doesn’t pay ANYTHING – not even one billionth of one penny – to record companies. Never have. That’s not “piracy,” either, you dolt.

      If you want the law your handlers asked for, drafted, and agreed to, to be changed, that’s and entirely different issue.

      Reply
  2. Avatar
    Anonymous

    So, if I’ve understood correctly, Youtube has 800 million music users and paid $1B, while Spotify has 100 million users and paid $2B. How jolly.

    Paul, Spotify earns $18 per user? Is this figure an average of the 40 million subscriptions (Premium in the United States is $10/mo however in some countries it is less – in Brazil for example it’s $5) + the 60 million advertised accounts? Thanks for clarifying, I’d love to know this.

    Reply
    • Avatar
      Anonymous

      The math being used here is 800,000,000x=1 Billion and 100,000,000x=2 Billion. Find x. And so, obviously Youtube is being rounded down to $1. And yes, for Spotify, the math is much more complex than this since spotify’s user base as pointed out doesn’t pay the same price across the board for the service. And so, using the value $18 for future reference will most probably be incorrect, unless the spotify subscriptions (paid + free tiers) grow proportionally.

      Reply
      • Avatar
        Anonymous

        And not all those 800 million consume the same amount of music (aka see ads) either. It’s an all around more complex calculation but this is the best we can do with the information we’re being given, and for the purposes of this discussion it doesn’t matter. This just matters if you’re trying to calculate how much either the paying portion of spotify’s user base or the ones in its free tier give, so that you can calculate this figure more precisely in future.

        Reply
  3. Avatar
    Versus

    YouTube: Please remove all the illicit content, and then we can have a balanced discussion of a fair market.

    Reply
    • Avatar
      an

      they already do.
      oh yeah i forgot.
      google has a magic button that can make infringing content go away like those tech illiterate music industry people they just dont use it enough.

      Reply
      • Avatar
        FarePlay

        Copyright is simply a workers protection bill. Whatever happened to “Red Flag” violations. There are a billion reasons why Google is breaking the law.

        Reply
        • Avatar
          figures

          prove it.
          oh wait you cant.
          thats why you need to bribe you lackeys in congress.

          Reply
  4. Avatar
    Maria Schneider

    Even a billion, when spread out among all the music in the world, with all the musicians to be paid on each project, is less than peanuts. People are getting nothing or next to nothing for the most part. Ads in exchange for music is sick. I don’t even want my fans being forced to choke down ads. And by the way, ads aren’t free! The consumer is paying for those ads in the cost of the products they buy. It’s all sick. And why should music makers be paid based on what Google/YouTube says make, or Spotify, or any streaming company, for that matter?? No clothing store pays for their inventory based on their store’s income in a given year. They buy the clothing based on the set costs of designing and manufacturing the item. Stores have to be smart when they buy, or they’re out of business. They can’t have all the clothing in the world, pay pennies to every wholesaler, but overall bragging they paid out a billion dollars, expecting everyone to be impressed. Music is the same. Most musicians are shelling out tens of thousands, even hundreds of thousands to make a recording… spending a year, two years or more of their time, and NOT paying THEMSELVES for that time … and then they’re supposed to be happy because even though they received nothing, Google tells us they paid out a billion? And we’re supposed to not notice that YouTube induces infringement for their own gain, destroying our livelihoods? This is sick — YouTube and Google are destroying not only musicians lives, but music itself.

    Reply
    • Avatar
      Verus

      Well said. The pricing model is extremely dysfunctional for music. It’s time for a minimum statutory rate per play.

      Reply
    • Avatar
      Someone Who Actually Understands

      “Even a billion, when spread out among all the music in the world, with all the musicians to be paid on each project, is less than peanuts.”

      It’s not a billion “spread out among all the music in the world, with all the musicians in the world.” It’s what they paid, for ONLY the tracks that were viewed, only the owners of THOSE tracks. Seriously, if you’re going to argue these issues, at least think it through.

      “Ads in exchange for music is sick. I don’t even want my fans being forced to choke down ads.”

      And how do you think broadcast television works? Broadcast radio? The vast, VAST majority of internet sites you visit? THIS site?????

      It’s ALL “Ads in exchange for the content.” You don’t seem to understand that very simple business model, that has been THE business model of the media industry for a century+.

      “And why should music makers be paid based on what Google/YouTube says make, or Spotify, or any streaming company, for that matter??”

      That’s exactly the way your record company and music publisher pay you – and every other artist.

      “YouTube and Google are destroying not only musicians lives, but music itself.”

      Nope. There is currently more music being created -and more music being consumed, than EVER before.

      Try again… With facts, next time.

      Reply
  5. Avatar
    Almost

    What a headline. Need those clicks I guess.

    Here let me help you – “Music Industry Critical of $1B YouTube Payout”

    Reply
  6. Avatar
    Musicservices4less

    Maria Schneider said it all! Google/YouTube/AlphabetSoup has figured out the greatest business plan of all time. Use all the third party content you want and only pay a portion of the money you bring in BASED ON THE MONEY YOU BRING IN! Wouldn’t be great if as individuals we can pay out bills just based on the money we earn!!

    Reply
    • Avatar
      Someone Who Actually Understands

      Wait….

      Isn’t that exactly what record labels and music publishers do to their artists? Pay them only on what revenue they bring in?

      Your thinking that the revenue-sharing model employed by YouTube is somehow novel or unprecedented shows that you really need to learn and think a LOT mnore about this stuff.

      Reply
  7. Avatar
    Remi Swierczek

    I hate the future. All is want is to do is go to my local record store and buy records and play them on my old fashioned record player. Digital music is for dummies and will never go anywhere! Hail the LP!!!

    Reply

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