Musing On Music #1

Beat it: the old and new clash as the established music industry is threatened by the growing power of YouTube.

In 2007, two years after YouTube’s inception, Justin Bieber’s mum uploaded his first video to YouTube. He was spotted and signed to Island Def Jam, and began making the rounds of radio stations until his first EP became a hit. A teen-idol phenomenon, he was a success story for the internet-age, and thousands of wannabe pop stars took to YouTube with the dream of following in his footsteps. YouTube was a handy promotional tool, but a record deal was their ultimate end game.

In 2012, Conor Maynard, another YouTube hopeful, was scouted and signed by Ne-Yo; touted proudly by the British press as the UK’s answer to Bieber. Maynard released one album, but failed to reach the same stratospheric success as Bieber. His record label put his next LP on hold. So Maynard returned to YouTube. He now posts clips of himself covering songs every few weeks, and collaborates with other popular YouTube-bred musicians such as The Vamps. He has a global audience of almost four million subscribers and makes approximately £10,000 in ad revenue for each video he posts.

Arguably, the record deal is moot.

In the last decade, YouTube’s facilitation of user generated content and participatory culture has enabled a new breed of musicians to flourish. Tech-savvy and entrepreneurial, these artists bypass the traditional conventions of managers and AR guys to directly engage with fans and mould their own careers, independent from the mainstream music industry.

In lieu of sending demos to RCA and Epic Records, they congregate around mavericks such as Kurt Hugo Schneider, the producer/video editor/musician with over 8 million subscribers, who has developed a hub of content, teaming YouTubers up to create viral covers, each one with a twist – Coke bottles used as percussion for example, or singers cloned to harmonize with themselves. Dubbed the ‘king’ of YouTube by Wired, Schneider could get a record deal in an instant, but like so many YouTube talent, he values the creative control and direct contact with his audience that is unique to a music career founded on the platform.

In 2012, a study by Nielson found that young people listen to music on YouTube more than any streaming service. And they don’t just listen to artists like Schneider and Maynard. They engage with their favourite songs, creating remixes, covers, backing tracks to fan-made music videos. Back in the mid-2000s record label execs couldn’t have been happier. YouTube’s rights management system, Content ID, ensured that rights holders not only earned revenue from ad spots on their own uploads, but by identifying third party use of the same material, the system enabled record labels to either block the videos containing stolen content, or gain advertising revenue from those clips as well. All involved were making a healthy income, and coupled with YouTube’s immense clout as a mainstream marketing platform that bypassed TV and radio promotion, the record labels were content to let the advertising income roll in while YouTube promoted their content direct to audiences across the globe.

Today the growing divide between YouTube and the music industry is not, as many suggest, due to YouTube refusing to pay artists for their content. It is that CD sales, once the music industry’s bread and butter, have diminished significantly. Now the money is in streaming. SoundExchange revenues from platforms such as Spotify far outstrip YouTube’s advertising income. And streaming services pay rights holders regardless of whether ads are sold, making YouTube’s offer even more paltry by comparison. Furthermore, now download sales have dipped as listeners opt to pay to stream instead, YouTube’s promise to serve the music industry a promotional tool now longer holds the same weight as before. Why should content be available free to viewers who will not convert to buyers? Furthermore, the record labels argue that YouTube is preventing people from signing up to subscription services. After all, why would they pay per month when everything is online for free?

As evidenced by Taylor Swift’s public spat with Apple Music, the music industry can simply withdraw their content if streaming platforms refuse to play by their rules. But YouTube cannot be reined in so easily. The safe harbours included in copyright law to protect internet companies from being responsible for the copyright infringement of their users ensure that YouTube is not held responsible for the content third party users upload to the site. Record labels cannot sue the company, nor control how users share and manipulate their material. This is the impasse the industry now faces, as the tech giant cements its position as the music app of choice for the majority of consumers, while disrupting traditional industry practices and cheating record labels and artists out of a huge chunk of potential revenue.

There is no simple solution. Despite record labels and artists lobbying hard for the reform of safe harbours, support is minimal. In practice rewriting copyright laws would be a precarious business – how to ensure the music industry could safeguard its rights without holding social networks liable for every trademarked image or soundbite their users might upload to the internet? To comply with the music industry’s demands, YouTube must either shift more content to its subscription streaming service YouTube Red, or sell its ads more widely and effectively, ensuring they can’t be skipped. But neither of these methods is likely to be popular with users – and they are the core of the audience-orientated platform.

It is no secret that YouTube’s user-participation model has created a new generation of digital celebrities who have become powerful influencers. With YouTube’s parent company, Google, purchasing royalty reporting company RightsFlow and investing in independent music publisher Kolbalt, it may be that the platform, recognising the potential power in the talent of its YouTubers, is preparing for a future in which it creates an alternative system to counterbalance the conventional music industry. Companies like Netflix and Amazon have already gone from selling content to creating their own, and with YouTube’s vast resource of creators, it could be a winning move if the platform began promoting its own homegrown artists in favour of conventional ones, thereby creating a next generation model for the record labels to compete with.

But while YouTube creates competition, it also offers opportunity. South Korean entertainment companies have taken advantage of YouTube’s global reach to gain fans overseas. By tailoring promotional segments to the platform, and uploading vlogs from K-Pop stars, they have created the illusion of a direct connection with overseas audiences similar to the appeal of many popular YouTubers. If American and European record labels utilised this technique, YouTube could become a far more useful marketing tool for their artists – and more uploads would mean more advertising revenue. It is currently impossible for a record label, which uploads a few music videos per month for its artists, to compete with the comparable ad-based income of YouTubers posting new content several times each week.

All theorising beside, it is clear that the music industry is currently toeing a fine line between the past and future, between what is known and what is constantly evolving. Whether the record labels choose to flow with the changes or stand by old systems, YouTube is already way ahead of the game, connecting artists to fans and listeners to music like never before.