“They are not serious about monetizing music on behalf of the creators and, as a result, music companies are realizing they have to reset the current relationship,” said an industry source to the Post.
The labels’ dissatisfaction with the free, ad-supported (or “freemium”) music model certainly isn’t new. In May, Spotify was put under serious heat to limit the amount of music subscribers could access for free. “Ad-funded on-demand is not going to sustain the entire ecosystem of the creators as well as the investors,” Universal CEO Lucian Grainge said earlier this year. The numbers back him up: ad-supported streaming services paid just $295 million, or a little over a quarter of the total revenue from streaming services in the U.S. last year, while boasting way more listeners than those with paid subscriptions.
Major labels have recently ramped up their effort to get better deals with YouTube after a report noted a huge jump in viewing time on the site. Last week, Google announced that the time spent viewing YouTube grew 60 percent year-over-year, and viewing on mobile devices had doubled.
“[Labels] are fed up with the lack of monetization,” said another industry source to the Post. “When you look at how music is monetized from lowest to highest, YouTube is at the bottom.”
While you shouldn’t expect labels to pull their artists’ music from the service in one fell swoop — as rogue users would just post their own videos — they will be pressuring YouTube to revise its business model. And Google’s still-in-beta solution, Music Key, probably isn’t the answer, either. “[Music Key] is a giant head-fake,” said another exec to the Post.
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