YouTube 3.0: Are Artists Being Paid Enough?

YouTube

(from Billboard.biz, October 4, 2013) YouTube has gone through many phases since its creation eight years ago. The first phase was centered on establishing an audience and scale. The second phase was launched in 2010. In this phase YouTube wanted to find better content from both professionals and amateur creators. The third phase YouTube launched has been the most important. That phase is making money. In 2013, YouTube has already made billions of dollars through advertising and is expected to receive 3.6 billion dollars in revenue from Google.

In 2007, YouTube introduced its Partner Program which allowed YouTube to share its ad revenue from videos with their creators. YouTube is the only social media site to do this. The content creators are now demanding more, and YouTube is beginning to find it hard to balance what they want and what their content creators want.

A strong debate has been started on whether or not YouTube is taking too high of a percentage of the advertising revenue from the creators. Content creators are saying that YouTube should only take 30% of the advertising revenue like ITunes, Google Play, and Xbox Live, instead of the 45% they are taking now. Chris Maxcy, YouTube Director of Content Partnerships, states, “It’s also hard to compare YouTube with download stores, because we’re often paying multiple parties — creators, publishers, labels and other rights holders — whereas download models pay only the publisher. When you add all that up, we clearly pay out to rights holders the majority of what we bring in.”

YouTube has stated, “The music industry is currently making hundreds of millions of dollars annually from having their content on YouTube. Music ad revenue for major record companies has more than doubled year over year.” Jeff Price, Co-Founder of Audiam, a startup that manages YouTube rights for artists, believes there is an opportunity to produce millions, even billions, more dollars for the rights holders. YouTube’s mobile advertising has tripled in the last year, and along with that the advertising rate is also rising. YouTube VP of Sales and Marketing, Lucas Watson, says, “We’re laying the groundwork for sustainable monetization for years to come. The angst that we’re experiencing now comes from having a platform that’s had crazy adoption and growth. The feedback we get tells us that people care. These are good problems to have.”