Image Source: Bloomberg
The largest music streaming service in the world, YouTube, revealed that it had paid the music business about $6 billion in royalties over the course of the previous 12 months, or around $2 billion more than it had previously claimed. Like the previous year, Lyor Cohen, the platform’s head of music, makes the announcement as a blog post.
Despite these significant numbers, trade associations for the music business and others have criticized YouTube’s royalties program throughout the years due to its lack of transparency and, in their opinion, insufficient payouts. In addition, the rights-management system used by YouTube is allegedly “full of flaws” and “ripe for misuse,” according to Billboard’s story published the previous day.
There is no disputing its influence and success, though. In his blog post, Cohen mentioned BlackPink’s most recent song, “Pink Venom,” as an example of how music lovers can find, listen to, and interact with music across various content types. According to Cohen, only YouTube can provide this full experience in one location.
Although the two companies currently seem to be merely keeping up with one another, YouTube claims that it still has its sights set on surpassing Spotify as the music rights industry’s largest partner by 2025.
Lyor Cohen, YouTube’s Global Head of Music, revealed today (September 13) that the company paid music rights holders more than $6 billion in the 12 months leading up to the end of June 2022.
This amount is important for a variety of reasons, not the least of which is that it represents a $2 billion increase over the $4 billion YouTube claimed to have contributed to music rightsholders in the same period last year (the 12 months to the end of June 2021).
Additionally, it is twice as much as the $3 billion that YouTube claimed to have given to the music industry in 2019.
However, things get pretty interesting when you contrast YouTube’s figures with what is known about Spotify’s corresponding compensation.
Spotify updated its Loud and Clear website earlier this year to reflect that it paid out more than $7 billion to music rightsholders in 2021, up from $5 billion in 2020.
Then, like YouTube, Spotify increased its annual payments to the music industry by almost $2 billion annually (albeit YouTube’s rise covered the 12 months up to the end of June 2022, but Spotify’s growth covered the entire calendar year).
How is YouTube maintaining its expansion?
Due to one of Lyor Cohen’s favorite phrases is the “dual engine” via which YouTube produces revenue for music rightsholders, primarily YouTube’s advertising business and YouTube Music / YouTube Premium subscriptions.
Cohen also said today that UGC made for about 30% of the USD $6 billion+ that YouTube gave to music rights holders in the year to the end of June (user-generated content).
Or, to put it more simply: YouTube is currently paying music rightsholders close to $2 billion annually in ad revenue derived from user-generated content (UGC).
When compared to the money music labels and publishers are getting from TikTok, Facebook/Meta, and other “developing” social platforms, that should give them pause.