From his roots at Def Jam to his current role as global head of music at YouTube, Lyor Cohen has long-since established himself as one of the most famous music executives of all time. Here, he tells Music Week about how the platform’s “twin-engine growth story” has contributed $4 billion to the business, hits back at its critics and details its bid to become music’s number one revenue generator...
To say that Lyor Cohen’s reputation precedes him would be a serious understatement. The former Def Jam leader, Warner Music chief and 300 Entertainment co-founder has divided opinion for the best part of four decades, ever since his early days at Rush Management.
The hip-hop mogul signed the likes of Slick Rick, DJ Jazzy Jeff & The Fresh Prince, De La Soul and A Tribe Called Quest to Rush before building a new generation of rap superstars (among them Jay-Z, Ja Rule, Ludacris and the late DMX) at Def Jam. An eight-year stint at Warner followed prior to Cohen launching 300 with backing from Google in 2013.
Once renowned for his no-nonsense approach to negotiations, Cohen has cut a more conciliatory figure in the wake of his surprise hiring as YouTube’s global head of music five years ago. But some perceptions can be hard to change.
“They tell me I’m a very polarising person, a rough, rough person,” reports Cohen on his dealings with the UK’s top brass. “But I think the music business is happy to have me inside because, no matter what they say about me, they know I have a deep passion for artists and songwriters and that this is paramount in my journey. And my journey is dedicated to a lifelong service of the music industry.”
The Manhattan-born, LA-raised 61-year-old, whose music odyssey began as a tour manager for Run DMC and the Beastie Boys in the 1980s, is about to get a whole lot closer to the British scene with his impending switch to London.
“I moved to New York in 1983, which I guess is close to 40 years now, and I’ll be moving to London, so I’m stoked and excited,” he says, with a smile. “I’m really looking forward to it.”
With three Brits – Universal Music Group’s Sir Lucian Grainge, Sony Music Entertainment’s Rob Stringer and Warner Music’s Max Lousada – all relocating to the US over the last decade or so, Cohen’s move in the opposite direction marks a notable shift.
“If you slice a British person open, they bleed music, if you slice a French person open, they bleed cinema,” offers Cohen, still the king of the soundbite. “So music is an essential element for a British person.”
The legendary American executive will link up with YouTube Music EMEA (Europe, Middle East and Africa) director Dan Chalmers in the UK. In a recent interview, Chalmers told Music Week that 85% of this year’s BRIT nominees had been supported by the Google-owned company, which claims two billion logged-in users watch a music video on the platform each month.
“It just shows you that artists that set themselves up on YouTube really are able to build and grow their fanbases by leaning into the platform,” he said.
Namechecking a cavalcade of contemporary acts including Ghostface600, Kae Tempest, Little Simz, Amber, BRIT Awards star Griff, Abra Cadabra, Snail Mail, Rema and Central Cee, it is evident that Cohen’s own passion for new music continues to burn bright.
“A lot of people always ask me, ‘Where is music going? What do you think the next big [thing is]?’ But I’m not a weather forecaster, I just like what I like and my music is kind of off the beaten path in a strange way,” he reflects. “I’ve been receiving lots of love in listening sessions. Artists are popping in and out and they give me a tremendous amount of respect and love. And that is nice to hear, because we want to contribute.
“We’re incredibly proud of the fact that this is an open platform that people from all walks of life and musical points of view are able to participate in and find other like-minded people around the world that are sharing some of their feelings. [That is] super-cool.”
I don't want a transactional relationship, I want to go inside the bloodstream of the industry - our platform can provide our partners with fame and fortune
Lyor Cohen, YouTube Music
Music Week gets reacquainted with Cohen over Google Hangouts, three years to the month since he last graced our cover. Back in 2018, the talk of the town was the new version of the firm’s YouTube Music subscription service, which has gone on to build up more than 30 million music and premium paid subscribers globally – up 10m year-on-year.
Of most pressing concern is YouTube’s recent announcement that it has paid more than $4 billion (£2.8bn) to the music industry in the last 12 months alone (trailing only Spotify). It also signed up more paid members in Q1 ’21 than in any other quarter since launch.
A key component of Cohen’s olive branch to the business is YouTube’s “twin-engine growth story”, combining subscription and advertising revenue. However, YouTube’s free tier, which the industry says pays notably less than subscription services, continues to be a source of controversy.
Familiar complaints were aired at February’s DCMS Committee inquiry into the economics of streaming. During a grilling by MPs, Katie Oyama, YouTube’s director, government affairs and public policy, rejected the notion that safe harbour laws were a “get out of jail card” for the firm to allow copyright infringement to take place on its platform, resulting in the so-called “value gap”. The UK has declined to implement the European Copyright Directive since leaving the EU but could yet introduce similar legislation in the future.
“Safe harbours have powered the user-generated content movement we are seeing,” she insisted. “We are seeing value... We’re seeing artists being broken on the UGC [user generated content] side. That is creating an entirely new revenue stream.”
Earlier, BPI chief Geoff Taylor had accused YouTube of a “massive underpayment” to the music industry and expressed scepticism at its projections of becoming the number one revenue stream for the business by 2025.
“We are not on a path to achieve that,” declared Taylor. “Last year, we received something like £35 million in the UK for all the tens of billions of views of music videos, which are largely on YouTube. That is about half of what we earn from selling vinyl records. That cannot be right... We would like to see greater efforts from YouTube to convert more users from their free tier into their paid service.”
Cohen, who says more than 30% of the $4bn figure came from UGC, responds in kind. “I think he’s stoking people’s fears unnecessarily, because we’re a global platform and he’s looking directly at his feet,” he tells Music Week, provocatively. “There is not a British act that wants to win only in Britain. British music always wanted to conquer the world and it did, and has. We are a global platform, so it doesn’t tell the whole story.”
The industry was drunk on subscription. That is hugely valuable and important, but they over-indexed in that one way to monetise
Lyor Cohen, YouTube Music
Stand by for more fighting talk, as the inimitable Cohen outlines YouTube’s bid to become the music industry’s best friend, his own evolving relationship with the business and what we can all learn from the pandemic…
What prompted your decision to move to London?
“I think that I can be helpful in communicating to the industry the power of YouTube – and the opportunity they have by partnering with YouTube. We’ve been hugely transactional: we come to sign the industry’s licences and then we go build some products and come back in three years. I want to shift it from transactional to partnership. In fact, I would love their input on products that we could build that could be more effective for them in signing, developing and bringing to market their artists. I don’t want to simply have a transactional relationship; I want to go inside of the bloodstream of the industry to articulate that, even though our platform may be more complex than others, it’s much bigger, much more powerful and has a bigger reach – and that it has the opportunity to provide our partners with fame and fortune. I’ve always had a beautiful relationship with the British music scene. Before I had my own crib, I had an office in London and I just loved the scene. I loved the diversity; I loved the bravery of the British music scene. And so yeah, I’m looking forward to it.”
YouTube’s stated goal is to be the leading revenue source for the music industry. How close are you to achieving that goal?
“We’re a clear number two. Over the last 12 months, we’ve paid over $4 billion to the music industry and what’s exciting is the twin-engine growth story that we have now layered into our advertising business, where people pay with their eyeballs. With a subscription service, they pay for the convenience. So the thing that I want to emphasise is that we respect and value the fans and we need them, wherever they are.”
So how do you become number one?
“Over the last two days I’ve been listening to music with the British music industry, and the heads of the labels have come and presented their priorities. One of the label heads had their kids in the room, because they were YouTube fanatics and wanted to see the YouTube people. And I asked the executive, ‘Do they have jobs?’ He scoffed at me and laughed, ‘They are only 13 and 15, of course they don’t have jobs!’ I said, ‘Are they fans of music?’ And he says, ‘They’re complete junkies!’ So I said, ‘Do they pay with their eyeballs? Or do they have their funds to buy a subscription service?’ And he understood what I was getting at. We meet the fan – and value them – however they want to consume music. So the fact of the matter is that the twin-engine growth story is real and valuable. We’re starting to be very sophisticated in understanding the consumer and meeting them where they are.”
Why do you think it has taken time for the business to adjust to that line of thinking?
“I think the industry was drunk on subscription. That is hugely valuable and very important, but the music industry was in tough times and I think they over-indexed in that one way to monetise. We’re like the tortoise: we just keep plodding along, building a subscription business and building an advertising business because we know that on a global basis, in any mature media industry, it’s a mix between advertising and subscription. We feel really excited that [through] the pandemic we’ve been able to help so many people and inform them about whether to stay home, how to get inoculated and sort through all the misinformation. We felt like that was a very special thing that we could do with the power of our global platform. With people being inside their homes and searching for rich media, they’ve been able to rely on and value YouTube – and it’s beautiful to see.”
Are there ways in which you feel streaming can be improved?
“Yes, the echo chamber of the algorithm doesn’t understand the surprise and delight of when I went into a record store, made a beeline to A Tribe Called Quest album and someone on the way out said, ‘Maybe you would like this De La Soul album?’ I already had expectations for A Tribe Called Quest, but what splattered my brain across the living room was the De La Soul album, because I was delighted and surprised. We’re in the 2.0 or 3.0 version of the algorithm, and I think delighting and surprising and allowing people to discover the rich heritage of music [is the way forward]. I have a brand new baby and I’m the minister of music in our household. I’m now walking her through Louis Armstrong and Billie Holiday, but that’s because my parents told me about those artists. So I think that the echo chamber of the algorithm could be better. And will be.”
So what role does YouTube play in breaking new artists?
“We play a significant role. Chuck D and I were talking a few months ago, where he said to me, ‘You know, Lyor, it used to be an audio business. And with MTV, it was an audio visual business. And now with YouTube, it’s a visual audio business.’ The ability to film has come down [in cost] significantly. You can story-tell with music. I remember when I was opening up the app in India, one of the poets that I met, who is very involved in the music industry, said Indians don’t hear music, they see music. YouTube allows [people to] upload and build traction wherever they are, you could live in the middle of nowhere and build an audience. The diversity of the music – the African, Latin, the Korean sounds – are significant to me. That you can build an audience from wherever you are in the world is just tremendous.”
How would you describe your relationship with the UK music industry? How has it progressed during your tenure?
“How has it developed? Before I came, we didn’t ever ask our [staff] to listen to music. The fact is that breaking an act is one of the most difficult things on the planet. It’s hard being in the music industry and trying to find diamonds in the rough and help them develop their craft and bring them to market successfully. So the fact we never listened to anybody’s music meant that we weren’t in it with them. I want to feel their pain when they’re suffering and I want to feel the joy of being shouted out at an awards show for the contribution that we had with that artist, so I think it’s vastly improved.”
Nevertheless, in the DCMS hearing earlier this year, the boss of the BPI accused YouTube of paying only a “tiny fraction” of what it should in streaming royalties, how would you respond to that?
“The fact of the matter is that we’re deeply committed to helping the artist and songwriter community make a living making music. If that wasn’t the case, if we were actually not doing that, it would be against the health of our platform. This platform is only interesting to the consumers if more artists are breaking, more songwriters are writing and it’s got a healthy ecosystem. And it’s growing dramatically, so the numbers don’t lie. So I’ll bring him to the new economics and help show him the light.”
How much progress do you think has been made on the conversation around the value gap?
“I don’t hear about the value gap much anymore. I think it’s an old, beautiful slogan. But like I said, we have a twinengine growth story. Would you agree there are people that won’t subscribe that are still lovers of music? Should they be excluded? We convert when they’re ready to convert and so we don’t exclude, so I don’t hear about it much any more.”
Well, it’s clear from artists’ ‘fix streaming’ letter to the Prime Minister that they do not feel they are being adequately compensated at present...
“There is an ecosystem. Whether it’s efficient or not is not for me to talk about. But there is an ecosystem and that ecosystem also has to get paid.”
Returning to the twin-engine growth story, why can’t YouTube pay higher streaming rates in addition to creating a lucrative revenue stream via advertising?
“Listen, we want to help artists build, connect with, and monetise their fanbase. We do not believe a per-stream rate is a good metric to measure YouTube’s pay outs to the industry. Per-stream rates assume all streams are equal but in reality, video streams are not equivalent to audio streams. In addition, AVOD [Advertising-based Video On Demand] consumption is not the same as SVOD [Subscription-based Video On Demand] consumption. The amount an artist makes on YouTube depends on several things, including their contracts with record labels and music publishers. We pay rights-holders the majority of the revenue generation on their music content paying rates that are on par with the rest of the industry across both the advertising and subscription businesses. Our business is built on a revenue share model, and overall we’ve paid out more than $12bn to the music industry, including $4bn over the last 12 months.”
You once described your two fears at 300 as “no hits” and “consolidation of distribution”. But what are your fears when it comes to YouTube?
“Oh, wow. That’s a hell of a good question. My fears at YouTube are being addressed – that we don’t have a collaborative relationship with the creative community.”
What has the business learned from the pandemic and what are some of the things you expect to change as a result?
“People have become more tech-savvy and there is a new style of working and recognising that maybe you don’t need to be in the office as much as before. Our fastest growing screen is the living room. During the pandemic, people figured out how to fire up their living rooms. Music is one of the primary use cases of the living room and we plan on leaning into it in a big, big way. During this pandemic, we saw artists from Led Zeppelin to Oasis to Andrea Bocelli leaning in on YouTube and either presenting some of their archival concerts or doing live concerts on YouTube in order to keep in touch with their fans, and it was just wonderful to see. We know that the world has suffered severely and our hearts go out to all the people that have lost loved ones and friends or people who have gotten sick. This is an unimaginable tragedy.”
You wrapped up a recent discussion by asking the participants to share a closing thought. We’d like to afford you the same courtesy...
“The opportunities for artists and songwriters, musical entrepreneurs, have never been brighter. Working in tandem with technology and platforms that have global reach is an opportunity to help educate both sides, because one of the things that they’ve asked me to do is shuttle between the music industry and the engineers. And I said, ‘I have no interest in shuttling, I actually want the engineers to meet the creators and the creators to meet the engineers, and to get out of the way.’ And I think people who are building these global products around music should get more information and get closer to the creative people. The creative people giving an input makes those products more effective. The last anecdote is that I’m relishing change because we’re in the era of change. Don’t be frightened by it, seize the opportunity to influence it.”