How much of YouTube revenue is driven by music?
On February, YouTube’s parent company Alphabet published the amount of revenue generated by advertisers in 2019. This was the first time the publicly traded company published their advertising revenue disclosed separately. In 2019, YouTube generated over $15 billions from advertisers, with Q4 results ($4,7bn) representing a 31% year-on-year growth with the previous period. Remember that YouTube has been expanding its subscription service, YouTube Music, to Latin American and developing countries lately. Overall, YouTube subscriptions topped 20 million by the end of 2019. The final amount paid by YouTube to the music industry is a sum of advertisements and subscription revenue.
Last week it was time for Alphabet to publish the results of Q1 2020. YouTube’s advertising revenue hit $4.038bn. Although it is a decrease from the revenue generated on Q4 2019, it still represents a 33% increase compared to the previous year. Alphabet explains the decline stating that overall advertisement spending was reduced during the month of March due to the COVID-19 pandemic. However, we now have better traceability of how much of this revenue is actually driven by music.
Thanks to a joint effort of MusicBusinessWorldwide and PEX we are able to see a better discernment of these figures. According to the data provided by PEX, Music as a category accounted for 5% of all YouTube content in 2019. Nevertheless, this 5% of videos generated 22% of all views. This is, music videos generate 4 times the amount of views than gaming –the largest category on amount of content– with just close to an eight of the content. Music also accounts for over 80% of videos with more than a billion views, and more than 84% of all YouTube videos content at least 10 seconds of music.
By looking at this context, and analyzing the current standard agreements between digital platforms and rights holders, we can have now a better picture of not only how vital is music to YouTube’s overall revenue, but also how unexpected events can suddenly decrease in advertisement spending that directly influences in how much money artists receive for their music.
With discussions about the whole business model –think user-centric payment proposed by Deezer– being either postponed or getting low traction from the industry, the independent sector needs to rely on optimizing margins in order to mitigate the impacts of the dependence on advertisement spending. One of the first steps in the current digital ecosystem is to take control of your digital supply chain. By partnering with SonoSuite, you are cutting intermediaries, becoming your own distributor thanks to our technology, and moving one step closer to better margin distribution to rights holders and artists. We deliver your catalog YouTube Music, ContentID and many more services. Stay tuned to our blog for more information on them.