The music world may have found itself a new big villain: YouTube

The music world may have found itself a new big villain: YouTube

ON MAY 23, 2014

Congratulations, Spotify and Pandora: You may no longer be musicians’ most hated tech companies.

Last Summer, the anti-Pandora rallying cry was at an all-time high. The Verge’s Greg Sandoval dubbed Pandora “music’s big villain.” Cracker’s David Lowery caused a major stir by penning the blog post, “My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89.” And Pink Floyd wrote an editorial in USA Today accusing the streaming music service of “tricking artists” into signing a petition that would cut their already-miniscule royalty payments.

Spotify didn’t fare much better in the court of public opinion. Radiohead’s Thom Yorke provided the most vivid takedown, calling the service “the last desperate fart of a dying corpse.” Meanwhile, the Talking Heads’ David Byrne focused his criticism on Spotify in a post not-so-subtly titled, “The Internet will suck all creative content out of the world.”

While Spotify and Pandora will always have detractors and supporters, however, public opinion may be beginning to shift. Documents revealed during a recent court case between Pandora and the performance rights organization ASCAP cast Pandora as the victim of a possible collusion scheme between record labels and licensors that sought to drive licensing fees up through shady anti-competitive negotiation tactics. And punk legend Steve Albini, who is among the most uncompromising musical icons of the past thirty years, recently sang the praises of both Spotify and Pandora, saying, “The single best thing that has happened in my lifetime in music, after punk rock, is being able to share music, globally for free.”

But one music platform that rarely receives the same vitriol directed at it is YouTube. Until now, that is.

Last night the Guardian reported that a trade organization representing independent labels called the Worldwide Independent Network (WIN) had accused YouTube of bullying small labels into signing up for its upcoming Spotify-style music streaming service. WIN claims that YouTube sent non-negotiable boilerplate contracts offering even worse terms than the deals indie labels get from Spotify, Deezer, and Rdio. But the biggest fuck-you, if true, is that YouTube threatened to block these artists’ videos on YouTube if they don’t agree to join the streaming service.

Musicians, meet your new enemy and its name is YouTube.

What’s often lost in the discussion over unfair royalty payments from Spotify and Pandora is that the largest streaming music service in the world is actually YouTube. It’s hard to quantify precisely how many of YouTube’s billion monthly active visitors use it to stream music, but Accustream estimatesthat 38.4% of all YouTube views are music videos. That could amount to almost 400 million monthly active users, which puts Pandora’s 70 million users and Spotify’s 40 million users to shame. And yet the music industry as a whole gets less revenue from these views than it does from paid streaming subscriptions like Spotify and Rdio, and Internet radio royalties from Pandora.

So even before YouTube’s shocking alleged offer (which the company has not commented on, but has not denied either) artists had a reason to be angry at YouTube. Usually that anger was concentrated on the service’s questionable copyright enforcement. But we’ve only recently begun to see notable musicians rage against YouTube’s sorry artist payments with the anger generally reserved for Spotify and Pandora. Last February, British singer-songwriter Billy Bragg told Music Ally, “If we’re going to speak out about the paucity of payment from streaming services, if we’re pissed off at Spotify, we should be marching to YouTube Central with flaming pitchforks!”

But setting aside for a moment the insulting offer made to the indie labels, YouTube’s “join our subscription service or be blocked” strategy may be the only sustainable way forward for the industry.As I wrote earlier this week, those free YouTube uploads, supported only by a dwindling amount of ad revenue, can’t support the industry — only paying subscribers can, which is what YouTube’s new streaming service will provide. Judging by the strong-arm offer, it appears that YouTube realizes this. Now whether it’s really willing to risk losing up to 38.4% of its traffic by offering “with-us-or-against-us” deals in an already crowded market of subscription streaming services is another matter entirely.

In any case, between this recent slap in the indie community’s face, its frustrating Content ID system, and its already-low royalty payments, YouTube may have just made itself Public Enemy No. 1 for musicians.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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