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YouTube’s Lyor Cohen tells the music industry to shut up and wait (basically)

By | Published on Friday 18 August 2017

Lyor Cohen

It’s nearly a year since YouTube announced it was hiring American record industry veteran Lyor Cohen as its Peacemaker In Chief, the music industry’s safe harbour campaign having ramped up somewhat Stateside earlier in 2016.

Yesterday, eight months after actually taking up that tricky post, Cohen took to the official YouTube blog to ponder a little about the music industry’s relationship with the Google video site. He basically told his former colleagues within in the music business to shut the fuck up and just wait for the good times to roll on in.

As much previously reported, YouTube, as the market-leading opt-out streaming service, has become enemy number one for the music community in recent years. Partly because of the impact the industry fears the Google-owned service is having on the market-leading opt-in streaming services like Spotify and Apple Music.

YouTube is an opt-out streaming service because anyone can upload content to its server, and copyright owners who do not want their music on the platform must then request its removal via YouTube’s Content ID system. Whereas a label’s music only appears on a Spotify or Apple Music-type service if they choose to opt-in.

The music industry argues that because of the way YouTube sources its content, that greatly increases the Google company’s negotiating hand in licensing deals, meaning YouTube enjoys much more preferential rates that the opt-in streaming services it competes with.

That is only possible because of the aforementioned copyright safe harbour, which says that YouTube can only be held liable for the unlicensed content users upload to its servers once it is made aware of its existence. To that end, the music industry has been busy trying to have the safe harbour rule revised, so that YouTube no longer gets protection, and its negotiating hand will become more akin to that of Spotify and Apple Music.

Cohen deals with the safe harbour issue directly in his new blog post, but not until the end. First he offers some other theories as to why YouTube’s relationship with the music industry is so fraught, and then tries to convince the YouTube-haters amongst his former colleagues at the record labels that things are actually much rosier for the music industry within YouTubes-ville than they probably think.

He starts off by talking up YouTube’s moves in the subscription space, correctly identifying that the music industry is currently much more enamoured with paid-for streaming than freebie streaming.

He concedes that YouTube came to market with its Red subscription service relatively late in the day, and is still very much rolling it out around the world. But great progress is being made, he reckons, and from a music perspective momentum in that domain will only increase as YouTube Music and Google Play Music are more closely aligned.

“Subscription revenue is still in its infancy”, Cohen writes of the wider subscriptions market, “yet it’s already reaping billions for the music industry. It’s not just some business model on a whiteboard; it’s a real and rapidly growing source of cash for labels and artists today”.

But while the music industry can look forward to lots of lovely YouTube subscription money in the future, Cohen continues, they shouldn’t forget that the company’s core revenue stream – ad sales – still has lots of potential.

“Some think ads are the death of the music industry”, Cohen muses. “Ads are not death. Death is death. Irrelevance is death. Fans not being exposed to new music is death”.

Hmm, maybe. “My time at YouTube has me convinced that advertising is another powerful source of growth for the industry”, he goes on. “YouTube’s ads hustle has already brought over a billion dollars in twelve months to the industry and it’s growing rapidly. Combined with YouTube’s growing subscription service, they’ve now got two engines taking the industry to a more lucrative place than it’s ever been before”.

And then, of course, there’s the promo value of YouTube. Never forget the promo value of YouTube. I can’t believe you forgot the promo value of YouTube!

Even the YouTube-haters in the music industry concede that the Google site is a crucial marketing channel, especially for new talent. So much so, even if the labels got their way on safe harbour, the Google company could still drive a hard bargain when negotiating licensing deals, based on the assumption labels ultimately can’t afford to boycott YouTube for marketing reasons. Though the labels might argue (or at least hope) that Facebook’s video push strengthens their hands in that domain.

But, Cohen says, he is going to make YouTube an even better marketing platform for all those budding new artists out there. “YouTube is already a great force for breaking new artists”, he writes, “in fact, the majority of music watch time on YouTube is coming from its recommendations, rather than people searching for what they want to listen to. But YouTube needs to find new ways to promote and break artists and their albums so they have a chance to shine on the platform and connect with their fans. This is one of my biggest priorities and you’ll see more coming soon”.

So to conclude, if only the music industry would be a little more patient, great things are incoming. More subscription money! More advertising money! More free marketing tools! But not if the fucking labels fucking fuck it all up with all their fucking safe harbour nonsense. I’m paraphrasing a bit there. But it’s what he meant.

“Without safe harbour, we’d all be lost at sea”, Cohen writes. “I’ve spent my professional life fighting for artists to get what they deserve. I’ve worked with the RIAA and the IFPI to fight piracy since back when the main concern was bootlegged tapes. [But] safe harbour has become an obsession – with many complaining it’s the cause of all of industry’s woes”.

Insisting he isn’t just parroting his employer’s official line (before doing just that), Cohen insists that “safe harbours is a distraction”. He argues: “Safe harbour helps open platforms like YouTube, Facebook, Soundcloud and Instagram give a voice to millions of artists around the world, making the industry more competitive and vibrant”.

It seems unlikely his blog post will placate any YouTube critics in the music community. But in some ways Cohen is right that safe harbour has become something of a distraction since it arrived at the top of the music industry’s lobbying agenda. After all, even if the labels and publishers got the legislative reform they seek, it could take years to confirm what new obligations any rewrite of the law actually placed on YouTube et al, and who knows where the digital music business will be by then.

And in some ways, at least some of the YouTube hate comes from the music industry’s dislike for free streaming, which will always be less lucrative. Though freebie streams are surely going to be part of the digital music business long-term and Google has arguably made more strides in this domain than anyone else.

Which isn’t to say that YouTube isn’t basically exploiting a loophole in copyright law, nor that copyright owners shouldn’t be seeking to close that loophole. Though you sense that some now see safe harbour reform as a kind of panacea that will make the digital music business work for everyone. And it won’t. Even if the music industry wins.

And, of course, from an artist and songwriter perspective there remains the big fat transparency problem – the fact many artist and songwriters don’t really know how their recordings and songs are generating money online because of poor reporting and deal secrecy at the labels, publishers and collecting societies.

Some moves are being made to bring more transparency to the streaming music business, but on some key issues the major music companies and big collecting societies continue to drag their feet. Doing so is anti-artist and anti-songwriter, and ultimately counter-productive for the entire business. And it also provides ammunition to the safe harbour dwelling tech giants, as Cohen neatly demonstrates.

“Critics complain YouTube isn’t paying enough money for ad-supported streams compared to Spotify or Pandora”, he muses in his blog. “I was one of them! Then I got here and looked at the numbers myself. At over $3 per thousand streams in the US, YouTube is paying out more than other ad supported services. Why doesn’t anyone know that?”

“Artists and songwriters need to truly understand what they’re making on different platforms”, he adds. And that means more transparency is required, but from the labels and publishers as well as the platforms. “We – the labels, publishers and YouTube – must shine a light on artist royalties”, he demands, “[and] show them how much they make from ads compared to subscriptions by geography and see how high their revenue is in the US and compared to other services”.