In an effort to quell discontent from rights holders in the music industry, Google has commissioned a study into the effect of YouTube on streaming services and the music industry as a whole.
RBB Economics’ research has indicated that if YouTube ceased to exist, 85% of those using the site to stream music would move to “lower value channels”, like radio or television, where the profit margin is slimmer.
The research, summarised by Google’s public policy manager, Simon Morrison, considers the impact of “cannibalisation” in the music industry and poses the question “does the fact that people listen to music on YouTube mean that they don’t use other—sometimes more lucrative—sources of music?”
Google states that whilst most would move to less profitable platforms, there would also be a spike in piracy, which would increase by 29%, and many would no longer engage with music at all. It also claims that blocking music on the site would not lead to an increased use of other streaming platforms.
The study claims only 15% of “heavy users”, deemed to be those who stream 20 hours or more on YouTube per week, would purchase subscription services like Spotify or Deezer. This figure changes to 12% for France and 19% in the UK.
Based on a survey of 1,500 people, as well as data from YouTube and streaming services in the UK, France, Germany and Italy, over the period of three years, the conclusion is that YouTube allows the market to expand and not be “cannabalised”.
However, criticism of these findings has been swift, with the International Federation of the Phonographic Industry, a not-for-profit body representing the interests of the recording industry worldwide, stating that YouTube, effectively the world’s biggest streaming service, is not compensating rights holders fairly and is not licensing material on fair terms. Ultimately, it claims, this disrupts competition and stifles the development of a sustainable industry.
Despite paying $1 billion to the music industry, YouTube’s current deals mean it hands over significantly less than other streaming services. And whilst YouTube brags that its Content ID software provides profit where users upload content, industry bodies are putting pressure on the legislature, calling for a need for arms length licensing deals and a continuance of closing the value gap.