In a remarkably rapid growth spurt, YouTube’s music and premium services combined now have more than 80 million paid subscribers, a representative said diversity — a whopping 30 million, up from the 50 million the company announced last September.
It’s a dramatic leap, especially for a platform where so much is available for free, and appears to rank YouTube – which is already the number 1 music streaming platform in the world – as the third or fourth largest in the world paid Music streaming service, behind Spotify, Apple Music and China-only Tencent, although such rankings are always stacked with asterisks (e.g. whether or not free trials are included in the list; YouTube includes them, which not all services do).
Still, the growth is remarkable by any measure, and comes with a years-long charm offensive aimed at creators and the music industry.
After a few false starts, YouTube Music and Premium launched subscription services in earnest in 2018, some 18 months after music director Lyor Cohen joined the company after his many years in C-suite positions at Def Jam Records and Warner Music, as, as well as 300 Entertainment (the he co-founded and was sold to Warner for reportedly $400 million last year). The move comes after years of contentious relationships between YouTube and the music industry over comparatively low royalties, a situation that hasn’t been mitigated by Cohen’s sometimes notoriously combative demeanor.
But YouTube has since worked hard to be “a partner” to the music business. The company now says it has paid more than $50 billion to creators, artists and media companies over the past three years; that total includes more than $6 billion for the music industry between July 2021 and June 2022. It has also beefed up its “dual engine” revenue model (advertising and subscriptions) amid a dizzying array of other features to help creators and labels work for them to promote music — including YouTube Shorts, basically the answer to TikTok, which the company says is now averaging 30 billion daily views.
However, $6 billion in 12 months speaks pretty loud. Tell top sources at music companies diversity that things have improved dramatically, although they believe there remains a significant value gap in royalties; Lucian Grainge, CEO of Universal, the world’s largest music company, said at the Music Matters conference in September, “It’s quite a change from where it was a decade ago.” As former YouTube chief business officer Robert Kyncl, who Warner Music becomes CEO Jan. 1, telling Bloomberg last year: “We make money, they make money. We succeed, they succeed. Alignment is perfect.”
Fair enough, but money and splashy features don’t seem to account for a 30 million subscriber sea change. In fact, it could be the cumulative effect of what Cohen says is a long-term strategy to improve the platform (while addressing many of the things people find annoying about YouTube’s free service) while engaging with the very people that he had fought against him so fiercely during his label stint.
“I think there were a lot of misunderstandings on both sides,” says Cohen. “So I got to work slowly, oscillating back and forth between engineers and the music industry so they could hear each other.
“We didn’t have a team for that either [interfaced] with the labels,” he continues. “When I came here, we were just a negotiation function, showing up every three years to collect a signature, rather than walking alongside the industry to understand what’s important to them. So we have evolved from a simple transactional partner to a partner that shows itself as a partner shows itself. We also got to work explaining the twin engine growth story of advertising and subscription; A lot of the record companies put a lot of emphasis on subscriptions but not on advertising.”
But the short answer for improvement is “that [paid] Subscription business,” he concludes. “Because we didn’t have one and didn’t switch our funnel, they didn’t think we were great partners. And building a successful subscription business, I think, is one of the reasons the industry is starting to feel good about us.” (He also clarified the descriptor of YouTube’s ad-supported, aka “free” option: “I always refuse to calling it ‘free’ — it’s not free,” he insists. “They’re paying with their eyeballs.”)
Improving the user experience has also been key in this effort. Along with Shorts, product manager Adam Smith rattles off a range of subscription plans and features the platform has developed to delight fans, including the wide range of music content not available on other services — ranging from concerts and TV gigs to radio Sessions can range—along with premieres and exclusive content like “afterparties” (where an artist holds an online event for a song or video). There are also features like Meet (where fans can watch videos together), Foundry and Artists on the Rise (artist development programs for independent musicians), channel subscription curation, and a host of other features.
“We’ve built YouTube Music and Premium over the last seven years,” Smith says, “based on these core features — ad-free, with the ability to play video or audio when you’re in another app or on your phone and the ability to access it when, for example, you get on a plane and forgot to download the videos or audio files you wanted. The goal is to enable people to take YouTube with them wherever they go, and we have an entire team of music industry experts, product managers and engineers creating what we believe to be a world-class music experience.”
He and Cohen also point to YouTube’s annual multi-channel livestream of the Coachella festival — which literally gives viewers the best seat in the house for free — and events like the early pandemic livestream of opera singer Andrea Bocelli’s concert at Milan Cathedral. which Cohen calls “one of the greatest moments of my life”.
Another element of YouTube’s charm offensive is aimed more or less simultaneously at fans and artists, who are on opposite ends of the same problem: For fans, if you can listen to almost anything in the world, what are you listening to? And how can artists make their music stand out from the unimaginable sea of possibilities?
Cohen, who began his career at Def Jam sister company Rush Management in the 1980s and has worked with Run-DMC, the Beastie Boys, LL Cool J and many others, brings an artist’s perspective to the equation. With the rise of social media, artists have essentially found themselves with another full-time job: working to further their careers and connecting with fans instead of making music.
“The fine print for an artist these days that they haven’t signed up for is [generating] Likes, clicks, subscribers, all those exhausting things they have to do to find their fans,” he says. “I think it’s a real struggle for a lot of them, and it’s a struggle for the labels too. That’s another thing we want to try to simplify and solve. I want artists to be able to focus on songwriting and developing their craft rather than being ‘on’ all the time.”
For fans, “one of the biggest challenges I think is the variety,” he says. “And that’s why I’m so excited about shorts. In many ways, shorts feel like digging in a box [of vinyl] and pull out records and wonder what’s next – it’s addicting. And what I want to do is take the fan — or consumer, should I say — to our main YouTube section where they can watch a premium music video or interview, performance, or anything else that creates deeper fan engagement. “
It’s certainly in the interests of music companies to see increased competition in the digital space, particularly streaming, which in just a decade has overwhelmingly become the dominant global source for music consumption. After years of near-faithful affiliation with Apple’s iTunes, and more recently embattled leader Spotify, the rapid rise of YouTube and Amazon Music is quickly leveling the playing field — and also signaling an attempt to counter what many in the music industry perceive as the next big threat comes from TikTok, which is preparing to launch its own streaming service, and is the latest of many platforms to take on the industry over royalties.
And while there’s always going to be a level of suspicion when dealing with one of the richest, most powerful companies on the planet — in this case, YouTube and Google’s parent company Alphabet — Cohen is at least saying what the music industry wants to hear. “Our goal,” he concludes, “is to be the #1 revenue stream for the music industry.”
https://variety.com/2022/music/news/youtube-music-premium-80-million-paying-subscribers-1235427016/ YouTube Music and Premium reach over 80 million paying subscribers