Image Source: Bloomberg
The largest music streaming service in the world, YouTube, revealed that it had paid the music business more than $6 billion in the 12 months between July 2021 and June 2022 — about $2 billion more than it said it had in the 12 months prior. The news is made via a blog post by Lyor Cohen, the platform’s head of music, much like it was last year.
Despite these significant numbers, however, trade associations for the music business and others have voiced concerns about YouTube’s royalty structure due to its lack of transparency and, in their opinion, insufficient payouts. Recent charges that YouTube’s rights-management system is “full of flaws” and “ripe for exploitation” were made in Billboard’s article, backed up by assertions from several unnamed individuals.
On the other hand, its effect and success cannot be contested. In his blog post, Cohen cited BlackPink’s most recent single, “Pink Venom,” as an example of how music fans can discover, consume, and participate in music across various content types. According to Cohen, only YouTube can provide this full experience in one location.
Although the two companies currently appear to be barely keeping up with one another, YouTube claims that it still has its sights set on surpassing Spotify as the music rights industry’s largest partner by 2025.
Lyor Cohen, YouTube’s Global Head of Music, stated today (September 13) that the company paid music rights holders more than USD $6 billion in the 12 months leading up to the end of June 2022.
This amount is noteworthy for a number of reasons, not the least of which is the fact that it represents a $2 billion increase over the $4 billion YouTube claimed to have contributed to music rightsholders during the same time period last year (the 12 months to the end of June 2021).
Additionally, it is twice as much as what YouTube claimed to have paid to the music industry in 2019 ($3 billion).
However, things really start to become interesting when you contrast YouTube’s figures with what is known about Spotify’s corresponding payouts.
Earlier this year, Spotify confirmed on its Loud and Clear website that it paid music rights holders more than $7 billion in 2021, up from $5 billion in 2020.
So, like YouTube, Spotify increased its annual payments to the music industry by almost $2 billion annually (albeit YouTube’s rise covered the 12 months up to the end of June 2022, whereas Spotify’s growth covered the entire calendar year).
How does YouTube maintain its own growth rate?
One of Lyor Cohen’s favorite expressions is the “dual engine” via which YouTube produces revenue for music rightsholders, primarily YouTube’s ads business and Music / YouTube Premium subscriptions.
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Cohen also stated today that UGC accounted for about 30% of YouTube’s $6 billion+ in payments to music rights holders in the year ending in June (user-generated content).
Or, to put it more simply: As a result of UGC-related advertising revenue, YouTube currently pays music rights holders close to $2 billion annually.
Compared to the revenue they are receiving from TikTok, Facebook/Meta, and other “developing” social platforms, it gives music companies and publishers food for thought.
Opinions expressed by California Gazette contributors are their own.
