Business News Digital Labels & Publishers

YouTube doesn’t negatively impact on the streaming market, says YouTube

By | Published on Friday 12 May 2017

YouTube

Value gap? What value gap? A new report confirms once and for all that Google’s YouTube doesn’t have any particularly negative impact on the other streaming music services, despite all the free music it offers. And who commissioned this report? Google. So, you know, they’d know, surely?

The web giant paid a company called RBB Economics to survey 1500 music consumers on its platform in a bid to respond to the music industry’s repeated vocal criticism of YouTube. And in particular the industry’s argument that the Google site exploits the copyright safe harbours to secure preferential deals from music rights owners, while hindering the growth of premium streaming services like Spotify and Apple Music that pay much better rates to the record labels and music publishers.

The Europe-focused study reckons that – if all the music was somehow removed from YouTube – 85% of the time, users who are currently tapping some tunes on the video site would instead rely on TV or radio for their music, which pay relatively low royalties too. Users would also spend 29% more time on piracy networks.

While, when it comes to a music ban on YouTube driving new premium subscriptions elsewhere, the report reckons that only 15% of even heavy music users on the video site, who consume more than 20 hours of music there each month, would suddenly start paying to stream. Though that figure varies from country to country. In the UK, 19% would go premium, whereas only 12% would in France.

The report also uses YouTube’s long stand-off with German collecting society GEMA to provide a ‘control’ territory, capitalising on the fact that the PRO finally did a deal with YouTube last November to compare music usage in Germany before and after that agreement. Blocking tracks on YouTube had no effect on their performance on the other streaming services, the report reckons.

Says Patrick Smith at RBB Economics: “Our research examines the question of cannibalisation and finds that in the absence of YouTube, most time spent listening to music would be lost or move to similar or lower value channels, including file-sharing and piracy”.

Yeah, well they would say that wouldn’t they? That’s what you’re all thinking right now, aren’t you? Needless to say, reps for the record industry weren’t persuaded or impressed by Google’s new research, which is a simple PR move – the labels reckon – to try to distract law-makers in Europe who are considering measures to limit the reach of the aforementioned safe harbour.

“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 globally-focused trade group IFPI.

“Services like YouTube, that are not licensing music on fair terms, hinder the development of a sustainably healthy digital music market. 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 [in recorded music revenues] will be sustainable for the long term”.

Meanwhile, the boss of the UK record industry’s trade group BPI, Geoff Taylor, questioned YouTube’s conclusions of its own research, reckoning that “despite its misleading headlines, the data in this Google-commissioned report reinforces the fact that YouTube is having a negative impact on revenues from recorded music”.

He went on: “RBB’s report for Google confirms that a significant proportion of YouTube consumption would move 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”.

Doing some number crunching, he continued: “If that usage were evenly distributed among YouTube’s users and 19% 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”.

“This data therefore reinforces the argument that creators have been making about the value gap for some time”, Taylor concluded. “YouTube continues to rely on a legal loophole to pay only a tiny fraction of the rate that competing services such as Spotify and Apple pay for music. This patently unfair distortion in the digital content market must be fixed once and for all, and we again call on the UK government and on EU policymakers to clarify that online platforms must secure fair arms’ length licences for the content that they commercially exploit”.



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