how much revenue is generated per thousand views . But there are multiple rights here being sliced in different ways and even if we disclose it , even then it ’ s pretty opaque .” In a rare instance of addressing complaints about transparency , Kyncl appeared to lay the blame with the labels and publishers . In an interview with BBC Radio last year , the YouTube CBO said fully independent artists who control all their rights and upload their music to YouTube are being paid handsomely . He used the example of Lindsey Stirling , an American violinist , dancer , and performance artist who controls her business through her own label and promotes herself through a popular YouTube channel . Kyncl claimed YouTube paid Stirling $ 6 million in 2015 alone .
“ It really depends how successful you are in driving your ship and … the flow of the money from us to you . Lindsey [ Stirling ] is set up directly with YouTube and sees exactly all of her consumption on YouTube and how much money she ’ s making . It ’ s very clear , and in other cases , maybe less so ,” Kyncl told the BBC . “ There are middlemen , whether it ’ s collection societies , publishers , labels . But also , what they do is they fund content and then they give advances , and they want those recouped . It ’ s just really hard when there is no transparency for the artist … I can say we ’ d be very happy to share that information if we could .”
Many in the music industry had to stifle their indignation at Kyncl ’ s assertion that YouTube would be happy to be more transparent if only the labels , publishers , and collection agencies would let them .
“ Their claim is basically they ’ ve dumped all this money [ into the music industry ] and if it ’ s not reaching the creator , then it is the labels ’ fault ,” says Graham Henderson , president of Music Canada , which represents the major music labels in Canada but is not privy to their contracts with You- Tube or other services . “ The answer is , first of all , 99.9 per cent of the artists we ’ re talking about do not have record deals with major record companies . Those that do have deals that are negotiated , transparent , and there are accounting statements . The suggestion is that somehow these evil record companies are hiding money somewhere on the ledger .”
Henderson says that as an entertainment lawyer in the 1980s and ‘ 90s , he regularly audited the labels to find unpaid money for his
CMRRA Pres . Caroline Rioux artist clients . He was also the
subject of artists ’ audits while working as senior VP of business affairs and e-commerce for Universal Music Canada in the ‘ 90s and early 2000s . He says that if a very success artist received a cheque for $ 1 million from the label and then audited , it would usually turn up another $ 100,000 or less . “ Those [ royalty ] statements are becoming more and more transparent and more open ,” he says , before calling Kyncl ’ s claim “ hogwash .” “ They want us to believe that it is our fault ? It ’ s victim blaming , number one , and it ’ s ludicrous because if they were on the same footing [ as other streaming services ], it wouldn ’ t be $ 2 billion , it would be $ 20 billion or $ 30 billion that they would be paying out and I can tell you we would live in a very , very different world . They would restore the old balance where there was enough money in the hands of independent and major labels so that they could actually invest in artists .”
It is widely believed that if YouTube was subject to the same laws and payment formulas as other streaming services – even other free services like Spotify ’ s ad-based tier – it would solve a lot of financial problems for creators and rights holders . According to the IFPI , in Canada in 2016 , ad-supported audio streaming generated $ 15.72 million compared to video streaming ’ s $ 17.59 million , but with a fraction of the users .
There are two reasons YouTube is able to pay lower rates for music : 1 ) YouTube ’ s ad action-based formula means the revenue generated from videos is unreasonably low , and ; 2 ) the “ safe harbour ” provisions found in copyright legislation have created an uneven playing field that protects YouTube and puts it at an advantage over rights holders and competing streaming services .
Regarding its payment formula , unlike the on-demand streaming services ( such as Spotify , Apple Music , and even Google Play Music ), You- Tube does not use a “ big pool ” model whereby it pays a negotiated percentage of total revenue to rights holders . It also does not pay a per-stream rate , even though per-stream averages are commonly referenced when discussing YouTube royalties . What it does is pay according to viewers ’ advertisement actions . So just because a YouTube video may be monetized and have an advertisement attached to it , it does not necessarily generate revenue on each view .
“ It ’ s a very interesting system based on time of year , advertising budgets , number of views , demographics watching the
video , the duration of the video , etc .,” says Price . “ The person who watches the video actually has to perform a type of behaviour . That type of behaviour is they either need to click on the banner or text ad , or alternatively , they need to watch at least 30 seconds of the video commercial , or if the video commercial is less than 30 seconds , they need to watch the entire duration . If they do not do one of those two things , the video does not make any money .” Additionally , not all ad views and clicks are created equal . For example , a video advertisement with a “ skip ad ” button is worth more if watched than a video ad with no skipping option .
So theoretically , a monetized video with 1,000 views could earn the same or more as a monetized video with a million views if the first did a better job of generating ad actions from viewers ( i . e . more people clicked or viewed the ads ).
In terms of the payment split , You-
SOCAN VP of Licensing Jennifer Brown
Tube keeps 45 per cent of the ad revenue and the remaining 55 per cent gets split amongst rights holders . YouTube ’ s percentage share is believed to be significantly greater than the percentage of ad revenue Spotify keeps from its free tier , and that 55 per cent can be split a lot of ways .
The creator of the video gets a share for owning the video , the label gets a share for the rights to the recording , and the songwriter and publisher get a share for the rights to the composition . If that publisher and / or songwriter uses a digital collection agency ( i . e . Audiam or the CMRRA ) to identify uses of their composition and collect royalties , then that agency also gets a percentage of the royalties they collected for their client . So YouTube keeps 45 per cent and the various rights holders fight it out for what is left .
“ If YouTube were to pay rights holders even what Spotify pays for their free tier , it would be a significant and positive step forward for the independent community , but they don ’ t ,” says Stuart Johnston , president of the Canadian Independent Music Association ( CIMA ), which represents indie labels , publishers , and other music businesses . “ So that business model – and I am going to say it over and over again – it devalues music . It is an unfortunate situation .”
Trying to force YouTube to change that busi-
For further reading on on-demand streaming royalties and how they work in Canada , see our feature story “ Streaming Money is Flowing … But Where To ?” in the September / October 2016 issue of Canadian
Musician , or online at CanadianMusician . com / Features .
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