YouTube Paid $6B in Music Royalties Last Year — Can It Top Spotify? – Billboard


Spotify is the king of music streaming — however its lead is dwindling. YouTube generated over $6 billion to the music trade within the 12 months ended June 2022, the corporate announced Tuesday (Sept. 13). That was a 50% improve from the final determine YouTube reported, $4 billion over a 12-month interval, in June 2020.

Reaching the $6 billion milestone raises the query of when — if in any respect — YouTube would possibly surpass Spotify when it comes to worth to rights holders and creators. “We would like our twin engine of advertisements and subscriptions to be the #1 contributor of income to the trade by 2025,” wrote Lyor Cohen, YouTube’s international head of music, in a weblog put up on Tuesday.

That gained’t be straightforward, but it surely isn’t unimaginable. Take into account how briskly YouTube has grown since Cohen joined the corporate from Warner Music Group (the place he was chairman/CEO of recorded music) in 2016.

YouTube Music reached 30 million subscribers in October 2020 and introduced the 50-million subscriber in September 2021 — a 67% improve price 20 million subscribers in lower than a 12 months. In 2017, a 12 months earlier than YouTube Music launched, the corporate’s two music streaming platforms — Google Play and YouTube Crimson — had a mixed 5 million subscribers, Billboard reported on the time. YouTube’s announcement Tuesday didn’t embody an replace on its subscriber depend for YouTube Music.

Spotify has handily maintained its lead over YouTube, Apple Music and Amazon Music in numbers of subscribers. Over roughly the identical time YouTube added 20 million subscribers (the third quarter of 2020 to the third quarter of 2021) Spotify added 28 million subscribers, to 172 million, and completed the second quarter of 2022 with 188 million. It’s nonetheless pushing hard, too, betting huge on podcasts and audiobooks to herald extra prospects.

However YouTube has the good thing about being the planet’s de facto supply for video content material. With 2.6 billion month-to-month customers as of January 2022, according to Statista, YouTube ranks behind solely Fb in international viewers dimension. That huge footprint offers YouTube a possibility to monetize free customers by means of promoting and convert some small share of customers into paying prospects. YouTube goes a step past different music streaming platforms by monetizing a spread of music movies: short- and long-form movies, stay movies and audio-only tracks. Consumer-generated content material accounted for 30% of royalties paid to the music trade — the identical proportion as its June 2021 announcement.

Spotify paid out $7 billion in royalties to the music in 2021, up 40% from $5 billion in 2020, in keeping with the corporate’s annual Loud & Clear report. That was $1 billion greater than YouTube simply introduced and 6 months earlier.

Since YouTube supplied a mid-year statistic, evaluating YouTube’s newest determine to Spotify requires estimating the latter’s royalties for the interval ended June 30, 2022. Spotify doesn’t specify music royalties in its earnings statements, nevertheless. Music royalties are lumped with different bills — together with some podcast content material — into price of gross sales, which have been $9.1 billion (7.96 billion euros) within the 12-month interval ended June 30.

Utilizing Spotify’s ratio of music royalties-to-cost of gross sales from 2021, the corporate would have paid out about $7.6 billion within the 12-month interval ended June 30, 2022, the identical interval masking YouTube’s $6 billion in music royalties. On this back-of-the-envelope calculation, Spotify’s music royalties have been roughly 27% better than YouTube’s for a similar interval.

Cohen’s objective of surpassing Spotify by 2025 would require YouTube to outgrow Spotify over the following two and a half years. It will take a big completely different in royalty payout progress charges, nevertheless. If Spotify can handle to develop music royalties by 20% yearly, YouTube would want to extend its payouts to the music trade by 32%.

Not way back, the music trade railed in opposition to YouTube for paying what many individuals thought-about substandard royalties regardless of proudly owning a massively in style platform. Now, seven years after the launch of the YouTube Music subscription service, YouTube is a crucial supply of each promotion and income.

Within the press launch, Michael Nash, government vp of digital technique at Common Music Group, famous YouTube’s “an exponential improve in payouts to recording artists, songwriters, labels and all the music ecosystem.” Annabella Coldrick, CEO of Music Managers Discussion board welcomed the “important uplift in funds from YouTube” that’s “very optimistic information for artists and songwriters in a time of financial uncertainty and rising touring prices.”

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