Lyor Cohen: YouTube pays out more than Spotify for ad-supported streams in the US

167 shares

It’s been eight months since Lyor Cohen was officially named YouTube’s global Head Of Music. And now he’s had time to bed in, the former Def Jam and Warner exec has jotted down his insider thoughts on the platform’s relationship with the music business.

Labels and publishers are likely to find some of those thoughts encouraging, some of them surprising… and, in one or two cases, find them quite hard to swallow.

Exhibit A: Cohen dismisses music industry concern over controversial safe harbor laws as nothing but ‘a distraction’.

He goes so far to suggest that without these provisions – which protect online sites from facing prosecution for user-generated copyright infringement on their platforms – ‘we’d all be lost at sea’.

“Safe harbor 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,” he writes.

“Every artist should be concerned if their music shows up online without credit or payment. But YouTube’s team has built a system in Content ID that helps rightsholders earn money no matter who uploads their music. As of 2016, 99.5 percent of music claims on YouTube are matched automatically by Content ID and are either removed or monetized.

“Before Content ID, when a fan shared a song with a friend through a mix tape, it was called piracy. Now it’s generated over $2 billion for content owners and goes far beyond what the safe harbor provision requires.”


Safe harbor isn’t the only topic on Cohen’s mind, though.

The exec also mentions YouTube’s previous announcement that it is paying music rights-holders more than $1bn on a 12-month rolling basis.

But he throws up a new stat – one aimed directly at those who point to Spotify as a model of how YouTube should be policing its content… and better paying rights-holders.

“Critics complain YouTube isn’t paying enough money for ad-supported streams compared to Spotify or Pandora,” says Cohen. “I was one of them! Then I got here and looked at the numbers myself.

“At over $3 per thousand streams in the U.S., YouTube is paying out more than other ad-supported services.”

“At over $3 per thousand streams in the U.S., YouTube is paying out more than other ad-supported services.

“Why doesn’t anyone know that? Because YouTube is global and the numbers get diluted by lower contributions in developing markets.

“But they’re working the ads hustle like crazy so payouts can ramp up quickly all around the world. If they can do that, this industry could double in the next few years.”

Cohen’s figures appear to be a direct rebuttal to the RIAA, which claimed earlier this year that “a thousand on-demand streams [earns rights-holders] $1 on YouTube, while services like Apple and Spotify pay creators $7 or more for those same streams”.


The exec explains that, earlier this year, he became part of the team which designed Google’s much-celebrated interactive ‘Doodle’ celebrating the 44th birthday of hip-hop – a prime example, says Cohen, of Google’s sensitivity when it comes to musical and cultural authenticity.

“I joined Google and YouTube because I saw a great opportunity to bring tech and music together and do right by artists, the industry and fans,” he writes.

That ‘great opportunity’ certainly involves the potential for subscriptions on YouTube, says Cohen – especially as it merges with audio streaming and download service Google Play Music.

“The team is serious about subscriptions. And now with YouTube Music and Google Play Music merging, I’m confident they will build an even better subscription service.”

YouTube recently announced it had surpassed 1.5bn logged-in (free) monthly active users; Cohen says he’s “very encouraged” by the latest Google data showing how many of them are paying for YouTube Red.

“We were late to the subscriptions party and YouTube’s focus for many years was largely just on ads,” notes Cohen. “While they have been at subscriptions for a year, and the numbers are very encouraging, YouTube must prove its credibility when it comes to its ability to shepherd their funnel of users into paid subscriptions.

He adds: “The team is serious about subscriptions. And now with YouTube Music and Google Play Music merging, I’m confident they will build an even better subscription service. And with more deals like the one YouTube recently signed with Warner, they’re going to be able to take it global.”

An optimistic vision – and one which will cause plenty of debate in industry circles over the next few days.

Check out Cohen’s thoughts – which appear on YouTube’s blog – in their entirety below.


Five observations from my time at YouTube

Earlier this year, I was asked by Google (because they know I am pre “Sucker M.C.”) to work on a Doodle celebrating the 44th anniversary of the music that changed my life. The birth of hip-hop was a fusion of expression and technical innovation that forever changed our culture and Google wanted to celebrate the moment when it all came together.

I had one condition on participating: that the project be authentic and not some tech company’s interpretation of a cultural revolution. They couldn’t agree more and the collaboration led to an amazing interactive experience that used technology and Google’s reach to celebrate the birth of hip-hop. It showed me that Google and YouTube know how to listen to feedback (in this case, mine), and are willing to work hard to get things right.

I joined Google and YouTube because I saw a great opportunity to bring tech and music together and do right by artists, the industry and fans. Eight months in, I’m more optimistic than ever that YouTube can do that, but the truth is there’s still a disconnect between YouTube and the rest of the industry.

So, how did YouTube get here? What explains the current state of YouTube’s relationship with the industry? I think there are five factors that explain the current situation.

1. Late to the party.

I get why some in the music industry would be skeptical of their relationship with YouTube. They were late to the subscriptions party and YouTube’s focus for many years was largely just on ads. While they have been at subscriptions for a year, and the numbers are very encouraging, YouTube must prove its credibility when it comes to its ability to shepherd their funnel of users into paid subscriptions.

But since I’ve been here, I’ve been incredibly encouraged by what I’ve seen. The team is serious about subscriptions. And now with YouTube Music and Google Play Music merging, I’m confident they will build an even better subscription service. And with more deals like the one YouTube recently signed with Warner, they’re going to be able to take it global.

2. Twin-engine growth.

The success of streaming subscriptions is one reason why I’m so optimistic about the future. Subscription revenue is still in its infancy, 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.

Some think ads are the death of the music industry. Ads are not death. Death is death. Irrelevance is death. Fans not being exposed to new music is death. My time at YouTube has me convinced that advertising is another powerful source of growth for the industry. YouTube’s ads hustle has already brought over a billion dollars in 12 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.

But that all depends on whether or not the industry chokes off these new sources of growth. I’m old enough to remember what the industry was saying about iTunes and Spotify before they started contributing billions to its bottom line. The growth that the industry is seeing today proves that ads and subscription thrive side by side.

3. Let’s talk dead presidents.

It is important that labels, publishers and YouTube come together to make transparency a reality, as I strongly believe it will help everyone in the industry move the business forward.

Artists and songwriters need to truly understand what they’re making on different platforms. It’s not enough for YouTube to say that it’s paid over $1 billion to the industry from ads. We (the labels, publishers and YouTube) must shine a light on artist royalties, show them how much they make from ads compared to subscriptions by geography and see how high their revenue is in the U.S. and compared to other services.

For instance, critics complain YouTube isn’t paying enough money for ad-supported streams compared to Spotify or Pandora. I was one of them! Then I got here and looked at the numbers myself. At over $3 per thousand streams in the U.S., YouTube is paying out more than other ad supported services.

Why doesn’t anyone know that? Because YouTube is global and the numbers get diluted by lower contributions in developing markets. But they’re working the ads hustle like crazy so payouts can ramp up quickly all around the world. If they can do that, this industry could double in the next few years.

4. Fortune AND fame.

Every day for the last 30 years, I’ve woken up with the same thought: maybe today’s the day I’m going to meet an artist that’s going to change pop culture. I love watching when an artist goes from obscurity to celebrity. That’s my drug.

Every artist I’ve ever worked with wanted some fame and fortune. YouTube will deliver fortune … but I think they need to be just as focused on bringing the fame. YouTube is already a great force for breaking new artists; in fact, the majority of music watchtime 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.

5. Without safe harbor, we’d all be lost at sea.

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. Safe harbor has become an obsession – with many complaining it’s the cause of all of industry’s woes. I’m not parroting the company line when I say the focus on copyright safe harbors is a distraction. Safe harbor 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.

Every artist should be concerned if their music shows up online without credit or payment. But YouTube’s team has built a system in Content ID that helps rightsholders earn money no matter who uploads their music. As of 2016, 99.5 percent of music claims on YouTube are matched automatically by Content ID and are either removed or monetized.

Before Content ID, when a fan shared a song with a friend through a mix tape, it was called piracy. Now it’s generated over $2 billion for content owners and goes far beyond what the safe harbor provision requires.

One of the first jobs I ever had in the music business was working as a road manager for Run DMC. Doing that taught me a lesson that has formed the core of what I’ve tried to do my entire career: set things up well so that the artists and fans can come together and make magic happen. I’ve spent my entire life helping artists achieve fame and fortune. I wouldn’t have joined YouTube if I didn’t believe the company was committed to delivering more revenue to artists, labels, publishers and composers — they just have to set them up well and get out of their way.

With love and respect,

Lyor CohenMusic Business Worldwide

Related Posts

  • This is a great article. I write cover songs and I love that I can throw them up and click the monetize button sans worry.

  • Tripp Fell

    Nice try Lyor. But no sale. You’re a joke. The world does not need safe harbor. And the idea that without it, the evolution of online entertainment would have been stymied is utterly ridiculous. Safe harbor is an ill-conceived concept that was never intended for the YouTube’s of the world. If anything, it does nothing more than illustrate the insidious greed perpetuated by the tech industry.

    • You might be right about Lyor but I think the world does need SH laws. Sure SH inconveniences the music industry but it does a whole lot of good outside it for tech startups and for free speech. Youtube is first and foremost a user-generated content platform, not a music streaming service. Think about all the user-generated content platforms (facebook, insta, wikipedia, ebay…) – taking away SH would impact ALL of them. The music biz needs a fix but taking away SH would have extremely wide and damaging implications far beyond the music industry.

      • Tripp Fell

        Yes user-generated content will be impacted if SH is eliminated – and that’s probably a good thing, because it never should have happened the first place (SH was created for ISP’s, not websites like YouTube that were created specifically to traffic in copyrighted material). Besides, society certainly won’t collapse simply because it never got a chance to view your cat video with that Beyonce song in it. Copyright & social media can co-exist and evolve just fine without SH.

        • SH were enacted to facilitate access to information and grow the digital economy, not only to protect ISPs. The law states 3 liability exceptions: for caching, hosting and conduits. ISPs are conduits and Youtube is a host. You should give YT a chance, it can work wonders for marketing. Also, beware of music industry rhetoric, it’s very patchy.

          • Tripp Fell

            Give it a chance?!! It’s been almost 20 years. And all that’s come of it is the decimation of the music industry while the YouTube’s & Spotify’s of the world have built billion dollar businesses off the backs of copyrighted content, not to mention establish absurdly low royalty rates that are now ingrained in the digital economy precisely because of the leverage afforded by SH. Get real. Your shilling for the tech industry is as absurd as Lyor’s.

  • john truelove

    The Google Kool-Aid is really working on Lyor, and it’s only taken what? 8 months?

    We’ve got YouTube Content ID just for USA so no dilution because of ads in Botswana or Paraguay or Cambodia getting mixed up with that oh-so-valuable US revenue Lyor is harping on about- and guess what? Our Youtube income is laughable.

    It brings me back to MBW’s statistic that, were the entire industry to “go dark” on YT it would require little more than 10% additional subscribers to the streaming services to make up the shortfall

    That Lyor can brazenly try to claim that $1bn is a contribution to the ecosystem worthy of applause when it represents such a huge percentage of actual music consumption yet contributes such a measly percentage of global streaming income is an insult to creators and rights-holders everywhere.

    (And while we’re at it, I’ll wager that the blank tape levy has generated in its time more than that 2bil he’s so proud of YT contributing – and home-taping did far less harm relatively speaking)

  • bea†

    Kobalt’s Proklaim is pretty awesome with Youtube Money

    • Landon Everette

      whats this?

  • Audio Texture

    Liar Cohen – get your short arms into Alphabet’s long pockets and start paying the artists that make Youtube the great service it is properly, that way you’ll get better content from said artists because they can afford to be more creative. The best, most productive, profitable & long lasting deals are always when both sides are happy. I mean when you make Spotify look generous you know you are taking the piss and it’s not like Alphabet is a struggling start up anymore.

  • Landon Everette

    super confusion……not liking all these corrupt executives at all these companies…apple, spotify, kobalt, youtube…etc…they are all bad.

  • Michael X

    “$3 per thousand streams in the US”
    Lyor’s statement is imprecise. Nevertheless, I can say that for us, this statement is reasonably consistent with our experience. For 5 million monthly US views on our music channel, we receive $2 per thousand views. When I add our revenues from views of our content streamed from other channels, we are making $5 per thousand views.