Saturday, May 13, 2017

Is YouTube good or bad for the music industry?

Although it's been a while you, my seven readers*, know that I'm fascinated by certain aspects of the music industry.  I'm old enough to remember 8-track tapes, cassettes, CDs, iPods, etc.  Even records, both LPs (and EPs) and singles.  I remember changing settings from 33 1/3 to 45 rpm on a record player, so I know what a "45" is.  I know what a "B-side" is on a record.  I remember having to buy aftermarket CD players for my cars because the auto industry was 10 years behind everyone else, still installing cassette players long after people had switched to CDs.  (Acura quoted me $800 to add a CD player to my old Integra, and I told them they were high--in more ways than one!)  I downloaded lots of music via Napster (on a 56k modem!!!) back in the day.  Lots of obscure references.  Anyway, I digress.

The ways that we can get music nowadays fascinates and delights me.  I can dial up a song by an artist I just heard about and listen in seconds, via YouTube among other ways.  I think there is a perception that YouTube is bad for the music industry, because people may tend to go there and listen to music, and not buy the music.

I don't agree with that view.  I look back to how I used Napster.  I'd set it up to download songs overnight and maybe in the morning I'd have 3-5 new songs (seriously) to listen to.  If I liked the artist(s) I'd go out and actually buy CDs.  Basically, my use of Napster resulted in increased music industry revenue, because I wouldn't have bought those albums without hearing the artist first.  I also went to a lot more concerts by bands I'd have never heard of otherwise.  I continue to both buy more obscure/less popular music and go to many more concerts to this day, using various music podcasts and YouTube to listen to new music.  Point is, new technologies can help or hurt musicians, just depends how you use them.

So, what prompted this rant?  This article, on the Google Blog, also known as The Keyword:
"What is YouTube’s role in the music industry?" by Simon Morrison

In the article Google references a study they commissioned to look at the impact of YouTube on the music industry.  It looks like the study looks at European listeners (UK, France, Germany, Italy).  You may dismiss this study as biased towards Google, who paid for it, but I happen to agree with it, based on my personal observations.

It is worth noting that there are five sections of the study, only the first of which has been released thus far.  Future sections also look interesting:
● In this first note, we consider the evidence of cannibalisation by YouTube of other legitimate music  services.
● In our second note, we consider evidence on the patterns of growth of different platforms over time, namely audio streaming and video streaming platforms.
● We then consider the evidence of a potential promotional effect of YouTube on other legitimate music services.
● In our fourth note we consider the value for consumers arising from YouTube’s music video offering.
● Our fifth note draws these empirical findings together and consider the direct value for the music industry.

I won't quote too much of the study, because what is posted online is already a very easy to read summary.  But I'll highlight this much:
Without YouTube, 85% of time spent listening to YouTube would be lost or shifted to lower or similar value channels
That is, if people couldn't listen to music on YouTube most people would not go out and buy the music.  Rather they would shift to other services that provided less revenue (including piracy) or simply not listen at all.  See Figure 2 in the study.

Furthermore, the study looked at the effect of blocking songs from being shown on YouTube:
We conclude that tracks that are blocked on YouTube typically do not perform better on  streaming  platforms  than  tracks  that  remain  available  on  YouTube.
Basically, blocking a song on YouTube does not result in more revenue to the industry through other, more profitable channels.  People don't switch, they just don't listen to that song, so there is no cannibalization by YouTube of other music services.

I think this is an illustration of the different ways people tend to look at the world.  The Keyword (Google Blog) summary says it best:
The cumulative effect of these findings is that YouTube has a market expansion effect, not a cannibalising one. 
That is to say: It's not a zero-sum game!  YouTube doesn't grab a piece of a fixed-size pie, rather it grows the pie.  YouTube grows the market.

I admit, I see the world through my own eyes, and I'm biased to think my view is the correct view.  Having said that, this study matches my personal beliefs and experiences.  I, for one, am very happy to be able to dial up most any song I care to at a moment's notice.

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