This is the fifth post in my YouTube economy series. You can read the other posts here, here,here and here
2015 was the year that streaming came of age across global markets (it had already got there in the Nordics and South Korea of course). In the UK and the US stream volumes grew by 85% and 93% respectively in 2015. These markets matter because they are the 1st and 4th largest recorded music markets and between them account for 40% of global revenue. But as strong as a validation of the music streaming model as those numbers might be, the real success story here isn’t Spotify, Deezer or Apple Music…it’s YouTube. In both the US and UK YouTube outgrew audio streaming services. With YouTube delivering so much less back per stream to rights holders than freemium audio services and the whole issue of safe harbour and un-monetized tracks (however good Content ID has gotten) it is little wonder that the record labels are having an identity crisis over YouTube. Indeed, as I wrote last year, the YouTube discovery journey has become the consumption destination. The advert has become the product. But there’s even more to it than this. Not only is YouTube outperforming the audio pure plays, music is being outperformed on YouTube by its growing body of native creators, the new generation of YouTubers.
YouTube started out as a place simply to watch (and upload) videos but has evolved into a sophisticated entertainment platform that supports a multitude of diverse use cases, both in terms of content and audience. Nowhere is this more pronounced than in channel subscriptions. In many respects ‘channel’ isn’t the most appropriate term as they are in effect talent feeds rather than channels in a traditional video / TV sense. Nonetheless, or perhaps because of this, they have become the lifeblood of native YouTube creators as diverse as Michelle Phan, PewDiePie, Zoella, SMOSH, stampylongnose and IISuperwomanII.
These are creators who often do everything from writing, filming, production through to front-of-camera. DIY superstars if you like. And they are fast becoming the lifeblood of YouTube. Of the 330 million subscriptions in the top 50 YouTube channels, YouTubers account for 34%. Compare and contrast with the measly 15% music artist and label channels have. And despite all the excitement around the increased subscribers Adele and Justin Bieber have racked up these last few months – they gained 8 million subscribers between them, making them the two fastest gainers across all of YouTube – music artists as a whole lost ground, accounting for just 31% of the top 50 gains during the last 90 days compared to 53% for YouTubers.
Music Is Losing Ground To Native YouTubers
Music does fare better in terms of views with 36% of the 41 billion top 50 views in the last 90 days. However it still plays second fiddle to YouTubers who account for 45%. But it is the direction of travel that reveals the most telling trend. Over the last 90 days 42% of the 50 top 50 growing channel views compared to 39% for music. In itself that may sound like a modest difference, but this is just the latest 90 day chapter in a much longer story. Music used to be the clear focal point of YouTube but that is changing. In terms of all time views music actually outpaces YouTubers with 42% compared to 41%. But at current rates that lead will be wiped out in the next 90 days. And here’s the paradox: music’s hold on YouTube is slipping even though YouTube is outperforming music services.
Part of driving force is out of the hands of the labels: video is eating the world, with more than 5 trillion short form views in 2015 alone. Music is always the first mover in digital content consumption, the trailblazer for other media. Once distribution, bandwidth and consumer sophistication all improve, video moves in.
Time To Stop Using YouTube Like School Kids Use Instragram
But record labels and artists can seize some control of their destiny, by taking a more sophisticated view of YouTube and exploring how to build strategies that work for YouTube in 2016 not for YouTube in 2010. Right now record labels are using YouTube like school kids use Instagram, obsessing with vanity metrics such as views rather than thinking more deeply about how to build lasting relationships with YouTube audiences. A new generation of music artists is emerging that have created and nurtured audiences on YouTube, often with little or no help from labels. Artist like Dave Days, Tyler Ward, Boyce Avenue and Hannah Trigwell have built their fanbases on YouTube, often starting with covers but also crucially often non-music content such as parodies and vlogs. Raised in YouTube these artists are entirely native to the platform. They understand what audiences want because that’s where they come from.
If the big traditional artists and labels want to start making up some ground on the YouTuber revolution they could do worse than take a few hints from this new breed of YouTube artist.
I’m the ceo of wavo.me a marketing platform for music. One of our product’s Wavo Boost is a sponsored content network for music. We help the music industry and artists sponsor their audio and video content across top music sites in a native format. Although we built our ad-tech with a lot of focus on Youtube it has been surprising how diverse the platforms industry want to send fans to. My question is: With other streaming services and alternative marketing opportunities like Snapchat and Instagram opening up, do you think labels losing ground to native YouTubers is in large part attributed to a mis-understanding of the platform? Or simply shifting more of their attention to other streaming services? And if YouTube is “delivering so much less back per stream to rights holders” then is this an issue? Finally, if this trend continues what do you see as the long-term consequences?
Mark, very nice summary of YouTube evolution and developments. Still it is just reporting on early stage evolution of real music industry after catastrophic event . Reporting on cancer eating the music business or report on activity in medieval society that took over digital civilization for next 12 hopefully not 1200 years.
Music goodwill is worth $200B / year to a stranger. Radio, streaming and 500K public places should be converted to primitive digital music stores tomorrow.
as a music listener I will continue to avoid the pablum that the major record companies try to feed me. Youtube has offered me the voice of creative real music.
Apples/oranges, chalk/cheese. Most of these YouTube ‘stars’ are people like Zoella who make 4 or 5 videos a week just chatting about ‘products’ (for which, BTW, they are probably being paid behind the scenes). You can see very similar stuff on TV shopping channels, except the presenters there are older and everyone knows it is a commercial. If you can suggest a way that a record label can do anything similar for no cost (‘cos otherwise you can’t make money from YT), let’s hear it.
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For younger-skewing acts, it seems to me the labels would be smart to pursue occasional cross-promotion with Youtube celebrities. They should also think about producing weekly content, whether it’s behind the scenes footage or digests of what the group has been up to.
More broadly, though, I would view Youtube celebs as just another new media element that results in thinner slices of the pie for all the old players. They are as much of a threat as gaming, social media, streaming, etc., and just as likely to take away time from traditional TV as from viewing and listening to music.
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This is real simple… Youtube got big, because WE all gave our products to them FOR FREE… It’s all OUR fault… Because FREE kills ANY market….. It doesn’t matter WHAT the product is… Just ask ANY economcs professor…. Now Youtube is a runaway freight train that’s 10 million miles long… There’s just no stopping it…. UNLESS, WE ALL REVOLT… Like Taylor Swift, Adele, Pharrel Williams, and Flo & Eddie of The Turtles did…
I think a smart move for labels would be to get some of their younger acts to do acoustic sessions on some of these big YouTuber channels, or even just a sit down chat with the artist where they just talk and have a laugh. It’s not too forced and it just says to the viewer “hey, if you like my channel you might like this artist because this is the kind of stuff I listen to. Go check them out…”, but in a very subtle way so it doesn’t feel like the YouTuber is “selling out” by, effectively, being paid to promote a product much like Zoella does.
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Remember kodak? they used to be the top camera co. in the country.
The digital age killed them.The digital age killed most recording studios in
New York.The digital age killed the music bizz as we used to know it.
They couldn’t figure out how to sell a product that you couldn’t roll joints
on when you opened the package,So they caved and left a huge vacancy;
and they still can’t figure it out except ;like the taliban, they’ve exploited the
vacume and created a bunch of thieves ,who are everybody who thinks
it’s o k to steal their favorite artists stuff.So now we have carpet baggers
and clever little opportunity companies who steal fees from a prepondrance
of gullible sucker artists who think they have a chance in hell of place ing
a song. Good luck Suckers I think Congress needs to help set some kind
of guidelines of fair practice for an industry that has gone amuck.
………………………………………………..Jeff Grizzler song writer musician.
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Thoughtful commentary ! Apropos , if someone are requiring to merge some PDF files , I used a service here altomerge.
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This article was quite insightful as. Labels have to up their strategy on youtube or else they ARE going to miss out on valuable fans. The relationship between the consumption rate on youtube and the rate at which labels are adapting their practices to fit the platform is definitely lagging. It is going to be really interesting to see how they are going to support this platform in the future. Especially since they are not gaining licensing royalties but rather CPMs.
Lena Franklin, May, 2016
Freeman School of Business / Tulane University
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