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Google-Commissioned Report Claims YouTube Adds Value to the Music Industry; Music Industry Disagrees

May 12th, 2017

[Photo: Rego Korosi/Flickr]

[Photo: Rego Korosi/Flickr]

RBB Economics has released a report commissioned by Google that defends YouTube from many music industry criticisms. The report, however, was met with a swift negative reaction by the music industry.

The report, which was released on May 11, 2017, is the first of three papers that RBB Economics will release for Google (which owns YouTube) that examines the video service’s data and information gleamed from a survey of 1,500 YouTube users in Germany, Italy, France, and the U.K.

The first paper is focused on the issue of “cannibalisation,” which in this context means; do people who use YouTube for music listening do so as a replacement for other streaming services, such as Spotify, that pay more in royalties to music rights holders?

According to RBB’s paper, 85 per cent of the surveyed YouTube users said that if the service did not exist, they would move to “lower value channels,” such as TV, radio, or internet radio. The authors also say 29 per cent of users would revert to piracy. Google says this is proof that YouTube is adding value to music.

The survey also claims that only 15 per cent of heavy YouTube users (people who watch more than 20 hours of music videos per month) would switch to a higher value service, such as a paid streaming subscription, if YouTube disappeared.

Additionally, the report uses the case of Germany, where many songs were blocked on YouTube prior to November 2016 because of the dispute between the service and performing rights organization GEMA. The authors’ examined the performance of those songs on audio streaming services before and after they were blocked on YouTube and say there was not a noticeable difference. For the authors, this means “tracks that are blocked on YouTube typically do not perform better on streaming platforms than tracks that remain available on YouTube. “

Music industry trade bodies were very quick to respond to the RBB’s report.

“Google’s latest publicity push once again seeks to distract from the fact that YouTube, essentially the world’s largest on-demand music service, is failing to license music on a fair basis and compensate artists and producers properly by claiming it is not liable for the music it is making available,” said the IFPI, which represents the global recording industry. “Services like YouTube, that are not licensing music on fair terms, hinder the development of a sustainably healthy digital music market.”

The IFPI, artists, labels, and publishers have regularly called for an end to safe harbour provisions in copyright laws that protect YouTube from liability when copyrighted music is uploaded its users.

“Rather than Google/YouTube’s ‘my way or the highway’ approach, where they say they can’t behave as other digital music services do, legislative action is required to address the ‘value gap’ that is denying music creators a fair return for their work and investment so that the recent upturn will be sustainable for the long term,” the IFPI’s statement concluded.

Geoff Taylor, the head of the BPI, which represents the U.K.’s major labels, also responded to the report, calling its title – The Value of YouTube to the Music Industry – misleading.

“This Google-commissioned report reinforces the fact that YouTube is having a negative impact on revenues from recorded music,” said Taylor in a statement. “The data in this Google-commissioned report reinforces the fact that YouTube is having a negative impact on revenues from recorded music,” said Taylor in a statement. RBB’s report for Google confirms that a significant proportion of YouTube consumption would move to onto a higher value service if music were not available on YouTube. RBB’s data shows that nearly a fifth of YouTube usage in the UK would divert onto higher value platforms, such as paid subscription services. If that usage were evenly distributed among YouTube’s users and 19 per cent of YouTube users chose to take out a music subscription, it would generate approximately £415 million per annum additional retail spend on music – doubling the current value of the UK streaming market. Even if only half this number chose to subscribe, the shift would still make an enormous difference to the UK’s artists, songwriters and labels and to the growth of our digital music sector.”

For further reading on the music industry’s complicated relationship with YouTube, read Canadian Musician‘s recent feature article, “YouTube: Friend or Foe of the Music Industry?”

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