They’re the words every label executive has longed to hear: a YouTube executive promising that the streaming company will soon be sending more royalty payments their way.
The executive, of course, is global head of music Lyor Cohen. Cohen is this week’s Music Week cover star, sitting down for a hard-hitting interview that’s the talk of the biz. And, amidst all the rollicking stories about the early days of hip-hop and the pithy soundbites offering a new “golden age” for the biz, there’s also a firm pledge that YouTube’s new subscription service will match the rates found on Apple Music and Spotify.
That will be music to the ears of the biz, but of course the controversy over YouTube has mainly centred on its ad-funded tier or, as Cohen would put it, “the people who pay with their eyeballs”. YouTube has a huge 1.9 billion users, dwarfing Spotify or Apple Music, yet the royalty payments have been so comparatively low against the premium services that the biz had to invent a term – the so-called ‘value gap’ – to describe them.
But, as well as YouTube’s new subscription income, Cohen says that Google’s rapidly growing advertising revenues will also, ultimately, feed through to rights-holders.
“Of course they’re going to get more money,” he told Music Week. “The problem with the industry is, they’ve always compared advertising to subscription. I’m hoping that there will now be more sophistication in understanding, but in terms of subscription, we’ll be providing the same sort of economics that the other services do.”
YouTube Music is playing catch-up in the subscription market – a gap it aims to bridge with its super-slick app and a marketing budget the like of which Cohen says he’s never seen before (and, remember, he was around in the major label glory days of the ‘90s). The addition of YouTube streams to the UK SIngles Chart, as exclusively revealed by Music Week, will also help. But Cohen stresses that the biz should look at YouTube’s business in the round, rather than focus on one aspect of it.
“When it comes to sub-primacy, everyone’s focused on subscription,” he says. “Go to the industry and ask how many people they hired that are experts in advertising. Zero. Talk to executives and it’s all about subscription. So all I can say is, blink and you’ll see our advertising business doubling and doubling. If you think about it, any mature media company is [split] 60/40, 50/50 advertising and subscription – Music Week is a perfect example. What people are going to realise is we’ve seriously gotten into the subscription business and our advertising business is growing dramatically.
“It’s a combination of those two factors that will make us incredibly important to the music industry,” he added. “So when people talk about supremacy it’s just one bespoke part of it. If you talk about the entire business; discovery, promotion, advertising and subscription, we’ll be an important contributor.”
Last week, the European Parliament JURI committee passed new EU copyright reform measures and sent them for ratification by MEPs, measures that could have serious ramifications for YouTube’s user-generated content, but Cohen insisted the industry is now much more positive about his company.
“I do know, from every single senior executive, that we’re not discussing the value gap,” he said. “We’re discussing how to maximise our funnel and how to grow the business, how to be better partners with them. It’s nice.”
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PHOTO: Paul Harries