My YouTube Experiment

YouTube is the first place many people go when they’re looking for a specific song. It’s common for fans to upload their favorite tunes along with static images of the artist or album cover art. For years many artists, labels and publishers have looked the other way or even embraced the practice. But all that is starting to change as the very nature of the music industry changes. Publishers and labels are working to hammer out deals with YouTube that would give them a small royalty. These deals aren’t based on any statutory rates (those set by congress) or any historical precedent (like typical sync licenses). Instead they’re based on the “percentage of ad revenue” model that has emerged as the new standard in the Alice in Wonderland world of on-demand streaming. Two of the “big three” majors, Universal and Sony already have their deals worked out via a partner enterprise called VEVO. But indies are still hard at work on their deals and, by all accounts, finding it tough going. It’s not easy to negotiate with a behemoth like Google, especially if you’re a small company. But at least it’s starting to happen.

Meanwhile, YouTube started offering uploaders the ability to “monetize” their videos as a way to win some points with copyright owners. Anyone who has uploaded a video, including (and this is important) people who don’t own the rights to the material they’ve uploaded, can monetize videos, and in theory share in the advertising revenue that YouTube collects when ads are placed within or over the top of the videos. Of course, copyright owners can request YouTube remove a video containing their property that was uploaded without their consent or knowledge. And YouTube does a pretty good job of getting this done quickly. But the onus is on the copyright owner to first find the content and then fill out the appropriate forms. The process is pretty similar to the DMCA “take down notices” that file-sharing (piracy) websites are supposed to honor, although, unlike most piracy sites YouTube doesn’t go out of its way to hide or obscure the illegal content or make removal an overly onerous process.

Thinking through all of this led me to the following question: Does monetizing videos actually help artists and indie labels?

THE EXPERIMENT

My latest album, The Stars Look Very Different Today, is the first that I self-produced and released on my own label (Sonic Camera Records). I have full control over where and how the album is available (excluding when it’s pirated, of course). As an experiment, I decided to see what would happen if I uploaded the entire album to YouTube as one continuous video and “monetized it” by allowing YouTube to insert ads. YouTube allows uploaders to place ads at the beginning, at the end and at one specific time during a long video, for a total of 3 ads.

Once my video had received 300 views over a few days, I took it down and reviewed the stats.  This is what I found:

The total minutes watched by all viewers was 3,284 minutes, or about 11 minutes per viewer (you can get this kind of info on your Analytics page). That means that each viewer listened to about 2 tunes (each one being about 5 minutes in length on average). Total income from the ads was $2.91. This comes out to .0097 cents per viewer or .0048 cents per streamed tune.

Granted, this was a limited experiment. Results based only on personal experience are anecdotal at best. I understand that the jazz world is quite different than the pop world, where “views” might number in the millions. Ad revenue might fluctuate depending on how many hits the video has. But I think my experiment is fair and representative of what an indie musician might expect.

I’ve monetized several other videos of mine for over the past year or so and all of them have generated similar revenue results. I’d be curious to hear what others find. My guess is the results will be pretty similar to my own.

Interestingly, .0048 cents per stream is eerily close to the average per stream amount artists often see from on-demand sites like Spotify, which in my experience was about .006 cents per stream.

My YouTube figure does not include the publisher fee that should (hopefully) be in the pipeline once deals are hammered about between my publishing administrator and Google. But my informed guess is that those fees won’t amount to much either.

You might ask, “What’s the problem? Isn’t YouTube a great place for artists to gain exposure and develop their fan base?” Yes, I agree that’s true. I, myself occasionally upload videos of my band performing live. It’s a great way to share music with fans and the general public. But when it comes to studio recordings that are currently available commercially, I’m increasingly coming to the conclusion that YouTube is not always a good thing for artists and the future of recorded music. At least, not yet.

One of my concerns, as I’ve mentioned in public panel discussions and interviews over the past few years (listen to my interview on WNYC from 2011 - Smackdown: Spotlight on Streaming), is that on-demand, subscription-based streaming is undermining the recording industry by allowing and encouraging consumers to listen to, but never actually buy music. After all, why would anyone buy a track on iTunes for $.99 when they can stream it for free or nearly free anytime they have Internet access (which is most of the time these days).

There are numerous reports, including this new one from Billboard that show download sales continuing to decline (as CD sales have been doing for more than a decade) even as on-demand streaming increases. This particular article ends with the statement: “The growth of streaming services negatively impacts digital purchases and puts additional pressure on the music business to generate new revenue by growing streaming services.” Can income from streaming services fill the gap? My take is that they can’t, or more likely, won’t. Here’s why.

As artists and music-lovers, we should stop thinking of YouTube, Spotify, Rdio, Deezer, Rhapsody and the rapidly growing list of streaming services as being part of the “music industry.” I think of the recording industry (the creator side of the music industry) as essentially being comprised of record labels, publishers, distributors, and artists. All are interested in the same thing — creating and selling music.

By comparison, companies like YouTube and Spotify aren’t really interested in selling music because they don’t sell music. They’re interested in accumulating user and subscriber data and selling ads. They use music as the draw. Spotify recently received an infusion of $100,000,000 in venture capital from Goldman Sachs. Not bad for a company that has yet to be profitable. Is Goldman Sachs interested in getting into the music selling business? I don’t think so.

So, I’m left with the thought that I don’t want to monetize my videos on YouTube. It doesn’t turn into any real money for me. Meanwhile, it allows YouTube to profit when they insert ads into the experience of listening to music. Furthermore, this model adds to the idea that on-demand streaming is going to save the recording industry. I'm worried it will have the opposite effect.

Some say that we’re just in a transition phase to a new kind of music industry. The key, they argue, is to make music as readily available and ubiquitous as possible so that those tiny fractions of pennies derived from ad revenue and subscription fees will add up for creators. In the words of Spotify founder Daniel Ek, “We believe music should be like water. It should just exist everywhere.” Leaving aside the fact that water is a finite resource (and all too scarce for many millions of people), the analogy is troublesome for another reason. It is based on the idea that if you make things cheap enough and available enough, people will consume more. Think of it as the “Walmartization” of music. The Waltons have certainly done alright with Walmart and consumers seem to like it. I’m not so sure about the people who make most of the stuff they sell or the small companies who can’t compete when they come to town.

It is possible that someday the money will start to trickle down, but clearly we’re not there yet. In the mean time, we artists should become as educated as possible. We should be aware of how things are changing and what’s driving that change. Only then can we start to drive some of this change ourselves.

All well-considered opinions are welcome in the comments section below.