The record industry and YouTube are falling out.
For a decade, the Google-owned video giant has been a habitual first port of call for artist campaigns.
But over the past year, major labels appear to have woken up to a crucial fact: when fans are listening on YouTube, they’re not listening on other services… and YouTube isn’t paying nearly enough.
According to IFPI estimates, YouTube and other ‘exclusively free, ad-funded platforms’ contributed $641m to the global record industry last year.
Subscription streaming services coughed up $1.6bn.
That fact becomes infinitely more damning when you combine it with this one: YouTube has over a billion monthly users, and they love to play music. There were just 41m people paying for music streaming in 2014.
Recent Ipsos research even found that more than a quarter of internet users (27%) listen to music on YouTube without even watching the video.
How on earth does the music business deal with this so-called ‘value gap’?
On the one hand, YouTube needs to be taught a lesson.
In the German market for instance, the music industry – via songwriter/publisher body GEMA – has essentially blackballed it.
Surprise, surprise: Germany’s music market just keeps on getting richer.
But artists rather like getting seen by YouTube’s billion users. It remains the go-to media to share on social networks, while radio stations are addicted to using its play-counter as proof of popularity.
If any kind of break-up with YouTube is on the cards for the music industry, it’s bound to get messy.
One Direction don’t care.
They’ve dumped it anyway.
Search YouTube for 1D’s new comeback single Drag Me Down, and you’ll discover Harry, Niall, Louis and Liam are nowhere to be found.
Sony won’t confirm it, but the major appears to have a taskforce stamping out any attempt to upload the track onto the platform.
Why? Because One Direction are using their colossal social media presence (Twitter: 24.5m; Facebook 37m; Instagram: 9.7m) to actively push fans towards iTunes and Spotify instead.
One Direction might be the nicest boys in pop – but they don’t mind giving Google a black eye on behalf of artists everywhere.
Chipping away at YouTube’s dominance like this is a colossal gamble for 1D: not only does it snub the video platform’s ginormous audience, it goes against a global music business promotion tactic so ingrained, it’s almost become an industry impulse.
“The question needs to be asked by the music business: At what point should a track go onto youtube?”
Kevin Brown, Spotify
Now that impulse has, for once, been resisted.
Because on every level, One Direction’s revolutionary release strategy seems to be working.
Today (August 7), Drag Me Down will be named the Official UK No.1 single – by miles.
It’s smashed worldwide streaming records on Spotify, clocking up a massive 4.75m in its first day alone.
(Plays settled down to around 3.1m-per-day over the next 48 hours, which as MBW noted earlier this week, earnt around $21k a day for the track’s rightsholders. Around 73% of this cash will remain with Sony.)
The track hit No.1 on Spotify’s Global Top 50 chart over its opening weekend, as well as territory-specific rankings the world over – including those in the US and UK.
In certain key markets, Sony’s ‘anyone but YouTube’ strategy has pulled in other streaming services, too.
Shridhar Subramaniam, President India and Middle East, Sony Music says: “One Direction has more Facebook fans in India than even the UK.
“In less than 24 hours, Drag Me Down was topping charts on all the Indian services.
“With the breaking of the global Spotify record, we are confident that the boys will set one here too.”
Spotify realises that all this represents a unique opportunity to debunk a music biz myth that has frustrated the Swedish company since birth.
It’s the one that goes: YouTube is a friendly promotional tool, while Spotify is an income-focused commercial service.
No wonder Daniel Ek’s team are throwing everything at Drag Me Down.
Not only has the track featured as a takeover ad across Spotify this week, but it’s been heavily pushed on the firm’s influential hit playlists and across its social media channels.
Spotify’s Head Of European Label Relations Kevin Brown tells MBW: “The strategy of putting music on YouTube first has become the prevalent release paradigm in the music industry.
“I’m pleased to say that the extraordinary success of Drag Me Down really brings that strategy into question.”
He adds: “We’ve been able to demonstrate the network effect of Spotify on a global scale.
“One Direction’s fanbase are a highly committed and very social. The band and Syco gave us the chance to capture that lightning in a bottle.”
Which is all very well, but not every artist has ready-made lightning at their disposal.
YouTube has inarguably helped build audiences and unleash careers for artists in the past – artists who didn’t have an army of 70m+ social media acolytes primed to ping towards Spotify.
Replies Brown: “I freely acknowledge that the strategy of not going to YouTube first isn’t necessarily the right one for every release.
“But the simple question should at least be asked: at what point should new music go onto YouTube?”
He’s onto something.
The most interesting element of 1D’s strategy is actually yet to come: when Syco decides to drop the official video on YouTube.
Sometimes, you have to stand back and marvel at the meticulous planning.
Just as the desperation of 1D fans to see the Drag Me Down video on YouTube reaches fever pitch, we learn that the group hasn’t even made one.
A flurry of online reports yesterday revealed that the band would soon be filming their new video at a NASA space station.
Cue another carefully-orchestrated spike in interest.
Syco is giving fans just enough. The drip-feed in full effect: The Drag Me Down video is coming. You can almost taste it. Better go listen to the track a few more times on Spotify and imagine what it will look like.
Don’t be fooled into thinking Team One Direction is sacrificing YouTube’s power – they’re manipulating it.
“There needs to be a shift in marketing strategy in the music business. It’s about building audiences over time, rather than a week-one peak.”
Remember, there is no lyric video out there, no fan uploads to sate the cravings until Drag Me Down’s official YouTube release.
Spotify’s Brown hopes that Syco’s refusal to go “Youtube-first” will inspire other labels to buck the trend.
“We appreciate that you need to be careful, particularly with a developing artist, when you’re building audience,” he says.
“But a shift in general marketing strategy is required – particularly now the UK industry is placing music with services such as ourselves the day it airs on radio.
“As consumption starts to shift [towards streaming], marketing has to become about building audiences and engagement over time, rather than focusing on a [week-one] peak.”
If other power players in the industry emulate Syco’s anti-YouTube bravery, Spotify’s importance will inevitably accelerate.
That in turn could trigger calls for streaming to become more significant within the data that compiles worldwide weekly music charts.
“If you look at the stats on the Top 40 UK singles chart for the past few weeks, you’ll see we’re at an inflection point where the split between downloads and streams is hovering around 50/50,” comments Brown.
“It’s only going to go one way in the future.”
Brown won’t directly confirm if Spotify is lobbying to have the UK chart sales/streams ratio (100:1) weighted more in his company’s favour – but it’s certainly a good bet.
He innocently asks: “Why should someone listening to a single on Spotify ten times in a week have a tenth of the impact of someone buying a single and listening to it once?”
For One Direction and Syco, however, the business’s current chart metrics are working out just fine.
Drag Me Down’s record-breaking performance on Spotify is particularly unusual because those 4.75m streams happened on the very first 24 hours of the track’s campaign.
Singles usually take time to bubble up to the top of Spotify charts. The track whose crown 1D pinched, Wiz Khalifa’s See You Again, took five weeks to hit its peak.
It was the same story for the biggest streaming track of 2015 so far, Mark Ronson’s Uptown Funk!.
“Spotify’s a complete meritocracy.”
So what can we expect for 1D over the next month: is Drag Me Down going to get even bigger, or fizzle away?
Says Brown: “It’s all about how a track reacts with the wider audience beyond the fanbase; that’s how you get a longer-term hit.
“Spotify’s a complete meritocracy in that way – the tracks the public love the most will rise to the top.”
Syco’s radical strategy with Drag Me Down could genuinely forever change the worldwide music industry’s approach to flagship music releases.
In terms of breaking YouTube’s stranglehold on the business, this is a seriously big deal.
Yet even Spotify recognises it won’t make much of a difference to One Direction’s popularity.
How fans can get hold of 1D’s new song is an essential talking point.
But what really matters is the same as it ever was: whether they actually like what they’re hearing.
Music Business Worldwide