Does YouTube Underpay Artists 13 Billion a Year? Understanding YouTube’s Article 13 Freakout

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From The Trichordist:

Desperate times for YouTube. CEO Susan Wojcicki is currently organizing a Childrens Crusade, against EU MEPs by urging YouTubers (mostly US teens) to “take action” to protect her $772 billion dollar company’s swollen profits. You see the EU just proposed guidelines (article 13) requiring platforms like YouTube to stop hiding behind its users and pay musicians fairly.  She thinks that is an outrage and is spreading wild disinformation.

. . . .

A rough calculation suggests YouTube is shorting musicians at least $13 billion a year.   It’s probably way more.  We can’t know the exact amount but it’s pretty easy to figure out the lower range.   Spotify with 160 million users in 2017 paid out at least 2.225 billion in royalties to rights holders (It’s probably a little higher). That’s around $13.90 user. YouTube provides the same service (except with video) and CEO Susan Wojcicki says YouTube has 1 Billion MUSIC users a month.

So even at Spotify’s low rates that means YouTube should pay $13.9 billion a year.  But YouTube paid less than $500 million to music rights holders last year. The entire US recorded music industry in 2017 was $8.7 billion.  That’s a lot of missing money.

This is Google: Second largest corporation on earth, manipulating children to protect one of the biggest corporate rip-offs in history. Disgusting.

Link to the rest at The Trichordist

 

16 thoughts on “Does YouTube Underpay Artists 13 Billion a Year? Understanding YouTube’s Article 13 Freakout”

  1. Self-serving false equivalence alert!

    Youtube isn’t just about music.
    Or even primarily about music.
    These days music might even be the least of Youtube users interests.

    Youtube hosts movie and tv show trailers, political commentary, tech product reviews, game walkthrough videos, history lessons, and travel tip videos, to name just a few random categories. You can spend weeks plugged in watching space vehicle simulations, science courses from PBS or Discovery, or international news reporting. You might even find the odd book trailer.

    None of which is even vaguely related to the music industry.

    Does Youtube underpay artists $13B a year? Almost certainly not.

    Comparing the user bases of Spotify, a music-only streaming service, to Youtube is ludicrous.
    Just another deep pocket shakedown attempt.

    Youtube makes money for Google and it makes money for the video uploaders, more or less in proportion to the user interest they attract. I’m hardly a fan of Google but if the “music industry” doesn’t see much money from Youtube it’s much more likely that Youtube viewers are watching recipe or Australian news videos than listening to music.

    • I can see CEO Susan Wojcicki flipping a switch or sending an order to drop/kill youtube in the EU – leaving a silent screen explaining that article 13 shows that the EU does not want youtube and other such sites operating within their boundaries.

      (and yeah, while I point you guys at Meat Loaf, I’m one of those watching interesting shows on youtube. 😉 )

    • Well, the article did specify that Youtube has 1 billion “MUSIC users a month.” Just anecdotally here, just yesterday I happened to watch both Michael Jackson’s “Smooth Criminal” video and Alien Ant Farm’s “Smooth Criminal” cover version, and between the two of them, the two songs had close to 300M views.

      So, it’s not crazy to think that Youtube does a big business with music.

      Just to reiterate from the article – they compared the 1 Billion per month Youtube MUSIC listeners to the 160 Million Spotify users.

      The quick math was the $13.90 paid per user by Spotify would be for the music listeners on Youtube, not all the users on youtube.

      Of course, youtube doesn’t have a subscription service, and that money would be out of pocket. In fact, Youtube is based on an ad model, so it’s really hard to determine what a music video would pay out per impression.

      Either way, just trying to clarify that the article wasn’t trying to include the entire Youtube user base or video impressions as you state – simply the music related ones.

      • Well said. This isn’t a case of false equivalence.

        The core tenet of democracy is that no one is above the law. International laws apply to everyone, including global corporations on the internet. If not paying what is owed is a crime for you and me, it’s a crime for YouTube. Or Google. Or Facebook et al.

        I love YouTube as much as anyone, but I really dislike cheating, and that’s what the numbers seem to show. Hopefully a court of law will decide whether the numbers are right or wrong. Either way, the free lunch is over.

        • International laws apply to everyone, including global corporations on the internet.

          This isn’t international law. It’s law of the EU. It applies in the EU, just as Australian law applies in Australia.

          • You’re right, that law is for the EU. I was actually thinking of the universal laws against theft and fraud. Unfortunately, I didn’t phrase my response clearly enough.

            That aside, Australia has many laws that are similar to the EU when it comes to regulating the behaviour of multi-national corporations. In this case, I suspect you’ll find that most other countries will follow the lead of the EU rather than that of the US.

      • Youtube makes money from bulk. Little bits from many sources and they pay out according to what earns it. And all it ads up to is $9B a year.

        So paying $13B to music is ridiculous.

        As is asking for royalties based on numbers of “users” without measuring actual consumption.

        Comparing Spotify users to Youtube users assumes Spotify users are the same as Google users when they aren’t. Music markets aren’t at all like video markets.

        The number of users says nothing about the *time* spent playing music on the service.

        There is no equivalence between somebody listening to Spotify while they write or clean house and somebody checking out a music video for three minutes before moving on. Payment numbers *should* be different.

        A third Spotify users rely on it enough they willingly pay a subscription fee.

        Youtube? Way less than the quoted number.
        Try comparing Spotify’s number (30M) to the number of paid Youtube Red subscribers. (1.5M)

        Here:

        https://en.m.wikipedia.org/wiki/YouTube_Premium

        Suddenly, YouTube’s music business doesn’t look that big, does it?

        Also, note that Spotify payout is based on the number of songs played, not number of subscribers.

        https://www.digitalmusicnews.com/2013/12/04/spotifythreeeasy/

        Youtube payouts are based on Ad revenue generated by the specific videos, not number of users. And it’s not much. That’s why they created Red, to try to make money off music. And so far they’ve failed.

        https://blog.songtrust.com/music-publishing-news/5-things-you-had-wrong-about-youtube-royalties

        So, again, Youtube number of users says nothing about how much music they consume.

        Much like European news media trying to squeeze money out of news links, the music folks are asking for money that isn’t there.

        https://the-digital-reader.com/2017/08/05/theres-literally-no-money-google-snippetlink-tax/

        • Nice breakdown of what YouTube’s business model, but this is not about whether YouTube makes a profit or not. It’s about paying for the the /product/ that YouTube makes money from.

          A car manufacturer has to pay for the materials used to make those cars, irrespective of whether it makes a profit or not.

          YouTube manufactures nothing of its own, no product, no content. It uses the same principle as Huffington Post – free content for ‘exposure’. Someone’s calling them on it.

          • Youtube isn’t a manufacturer or producer, no.
            But they are a service provider.
            The provide the producers access to users. Access is as much a product as any physical object.

            And they *pay* the content providers in proportion to the *consumption* of their content. Ask the likes of Rooster Teeth, PBS, IGN, Discovery and all the professional content providers why they spend significant money in their vignette videos. They’re not doing it for exposure; they’re doing it for cold cash. And the cash pays for both onscreen and backend staff. Those aren’t garage operations without alternatives.

            When you get down to it, the Youtube business model is similar to Kindle unlimited, but without the demand for exclusivity.

            Both provide access to a substantial amount of eyeball-hours and both take a cut of generated revenue (subscriptions for KU, ads and subscriptions for Youtube) and distribute the rest in proportion to how the eyeball-hours are distributed.

            Neither pays out based on subscribers, but rather on consumption. If nobody watches a video/book there is no payout. Nothing is guaranteed.

            Where youtube differs from KU the most is that a *lot* of the content is purely promotional, seeking to drive viewers to the real revenue generation product. Movie and TV show trailers. Commercials. Lots and lots of commercials. Exposure is a desired payout to them.

            A lot of “lesser” content is from Independent producers earning significant revenue out of their own homes, from commentary, analysis, “reaction videos”, reviews, and tutorials. Unlike Huffington Post, YouTube’s service provides them with cash as well as exposure.

            Again, not equivalent.
            Youtube isn’t spotify. It isn’t Huffington. It isn’t MTV.
            It’s its own creature.

            Youtube is a weird creature but so is KU and over time we’ll see even more “weird” services as platform economics and ecosystem economics spawn more and more new services.

          • acflory, no they aren’t calling Google out, they are making up imaginary numbers and imaginary deals.

            And they are painting recording companies as idiots(which I’m fine with). And the musicians who sign with them. And the musicians who post their music directly on YouTube, facebook, MySpace and so on. All idiots.

      • Spotify is a music service, people using it play music they like over and over all day/night long.

        That does not compare to your 300M views over all the years those two youtube videos have been up.

        Most of the Michael Jackson’s “Smooth Criminal” have been up 7-9 years, as was the Alien Ant Farm’s “Smooth Criminal”. Too bad it doesn’t ell us how many bothered to watch it this year.

        So we need better numbers – and then we need to split the profits among ALL the youtube videos watched. Shall we do that by item watched – so a two minute piece of music pays as much as an hour concert or documentary? Or would by the minute be more fair?

        Either way, music’s cut won’t be anywhere near the 9M made …

  2. Looks like a case study in the dangers of ceteris paribus is in the making. It means, “all things being equal.” It sounds cooler to say “ceteribus paribus” than “all things being equal.”

    Economists use ceteris paribus all the time. For example, Ceteris paribus, doubling cigarette taxes will double the tax raised from cigarettes. Sure it will, if nothing else changes. If everybody buys exactly the same number of cigarettes at the same places after the tax is enacted.

    But nothing remains the same after such a change, and the economists will then drop CP and go into the real world. (Think my example is silly? Washington DC did exactly that and found they lost total tax revenue.)

    So, make YouTube pay? Fat chance. They will just change their business model, and musicians will mourn their sudden lack of exposure and name-recognition.

  3. I don’t spend a lot of time on YouTube, too busy writing, but I have watched a few then searched the artist or group to hear a full song. I’ve yet to buy any, mostly it was curiosity.

  4. I have a Linux box set up with a good audio card as my sound system and I only connect a display when I’m adjusting the sound or choosing a source. I occasionally listen to music from YouTube. It is a great place to find innocuous white noise music-like sounds, which I occasionally find conducive to work. I assume that the outfits that create the sound would leave YouTube if they didn’t like the deal. It’s not as if there are no alternatives.

    So what’s all the fur flying about?

  5. So, no one else notice the whole CEO of a $772 billlion dollar company right out of the gate? Why bother starting with the truth when you can add 2 and 2 together to get 42?

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