Should I release my music on YouTube or not? We’re not just talking about how much money you can make – our aim is to explore the wider issues around the music industry’s attitude towards artist monetization on YouTube.
Back in the day, the only way an artist could find an audience was by performing live. This was before people could capture recordings of music on tape or on other physical formats in order to sell them. If you moan about declining physical sales these days, you should perhaps remember that there wasn’t a physical market for music at all until fairly recently!
YouTube has been perceived as the black sheep of the music industry for a while now: the critics saw a company making millions via advertising, whilst paying tiny sums to the artists who actually provide the content! Crucially, a tiny sum is paid out per stream. The more streams an artist receives, the more royalties they will be paid. Of course, until royalty rates are higher, you’d need a lot of streams over a long period of time to make a significant profit. YouTube’s per-stream rates seem to be even worse than those for other major streaming platforms at first glance. It’s impossible just to find out what the standard tariff is, as there are too many factors that can affect the final payout. Streaming platforms usually take the following factors into account: the country in which the music is being streamed, the share taken by the digital distributor, and the type of stream (premium or funded via advertising), among others. YouTube’s explanation of their royalty payment structure is also unusually complicated. Nonetheless, the fact remains that royalties increase in direct correlation to the number of streams an artist accumulates.
If you look at the example of an artist like Baauer, you can see the huge financial potential of YouTube: his legendary song „Harlem Shake“ turned out to be a goldmine for producers. This was not due to the popularity of the song itself, but rather thanks to the countless parodies made by fans, which generated more views than the original! This meant that Baauer earned lots of advertising income, via YouTube’s Content ID system. You could argue forever about the small royalty sums that YouTube pays out per stream. Alternatively, you could recognize that the main thing is the quantity and that this promising business model should not be suffocated before it even has a chance to become established. Since January 2014, iMusician Digital has also started using YouTube’s Content ID system to exploit meta- and audio data on our clients’ behalf.
Time to Rethink
The idea that a song can generate income over a long period of time is new and can be attributed to our new culture of streaming. In contrast, downloads can’t claim the same. They lose value over time, like other physical products.
Labels and artists have started to publish their accounts, in order to show how much they earn via YouTube’s per stream model. One of the lowest payouts was 0.001 cents per stream! If the song had a million streams, that would equal 1000 euros. To get some perspective, try comparing this to iTunes: a song costs 99 cents to download, and the artist keeps around 70%. However, a song sold on iTunes only makes money for the artist once. When sold, it’s worth about 70 cents, but after 100 plays, it is only worth 0.7 cents. Seen from this angle, my favorite songs are worth less than a randomly purchased piece of music that I hardly ever listen to.
The question of whether to release your songs on YouTube or not depends upon your position as an artist. If someone like Thom Yorke criticizes the streaming model, it’s because he was part of a golden era in the music industry. But was music really worth more during that time? Or did the larger corporations have such a powerful influence over music that they could demand whatever they wanted from a record deal, sometimes trapping artists in an equally exploitative situation? Characters like Thom Yorke do not, therefore, really represent the opinions of the artistic community worldwide.
Would a new band without a marketing budget from a major label accept 1000 euros per month for 10 videos on YouTube? Probably. Every opportunity to present yourself to the public is priceless for new bands, as you only start to make serious money once you reach a certain level of fame. You won't get there if you decide to only sell your songs on iTunes, and don’t use YouTube to your advantage as a promotional tool.
YouTube: The most important source for music worldwide
The music industry seems to have welcomed new types of open access business models. Do they have any alternative? YouTube is the most important resource for music consumption worldwide. The site has more than a billion visits per month, more than six billion hours of video are consumed per month, and 100 hours of video material is uploaded every minute. The video platform reaches so many people on various devices in this way that advertising agencies always payout to the major firms, regardless of how many songs are uploaded illegally.
However, it isn’t just the majors that use YouTube to generate income. Labels like Selfmade Records (Hip Hop), Kontor or Armada Music (Dance) also create their own channels and participate in YouTube’s partner program in order to receive advertising income, which increases in correlation with the quality and quantity of their channels. (See our post on how to optimise your YouTube Channel). We will also be posting next month about YouTube’s recommended function: what can you gain by putting your video in a prominent place in YouTube’s recommended section, and can you (as the rightsholder) have any influence upon this?
The Circle is complete
Artists who have started making music recently don’t assume they’ll get rich by selling it. In a way, we have come full circle. Musicians were in the same position before physical copies of music were invented. If you do get famous these days, you can make more money from live performances than ever before. This part of the industry just gets more and more lucrative, especially as time goes on and if your fame increases. Things have developed naturally, and we must get used to it. It was only due to artificially imposed circumstances that music was not available unlimitedly for so long.
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