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.
“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.”