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Knocking Off YouTube’s Populist Halo

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In recent years, the large tech companies—Amazon, Google, Apple, and Facebook—have played a great trick on consumers. By disrupting the old gatekeepers out of existence, they claim, they have leveled the cultural playing field, leaving no barriers between people and the media they love.

Individual choice is supposed to rule the day; we can listen to anything we want on Spotify, or stream thousands of movies on Netflix. We have been given an on-demand culture—anything, from streaming music to a taxi, available with a couple clicks or swipes. And when it’s not free, the prices can seem shockingly cheap.

Savvy consumers might already have seen this narrative for what it is: a mirage. The old gatekeepers may be gone, but in their place have arisen a few sturdy monoliths, and they are beginning to exercise their authority, becoming the kind of troublesome, exploitative intermediaries they promised they’d never be.

Amazon’s disputes with publishers are by now well chronicled. Its recent and ongoing war with Hachette shows that not only can the Big A not be trusted, but that, even in a mostly digitized culture, power still lies with those who control the channels of distribution. And when it comes to squeezing publishers for a slightly higher margin, Amazon is willing to go all the way—by, for instance, turning off “buy” buttons, recommending competitors’ products, and delaying shipments. It’s since launched a similar war against Warner Home Video. A company vaunted for its customer-centric attitude suddenly looks rather venal and petty when pursuing its self-interest.

And now it’s Google’s turn to flex its monopolistic might. YouTube, Google’s video service, is launching its own streaming music service, one that would compete with Spotify, Rdio, Amazon, Apple/Beats, Pandora, iHeartRadio, and a clutch of others. And yet, before it’s even launched, YouTube has told indie music labels that it will block their videos if the companies don’t agree to their terms. Depending on whose numbers you trust, this may mean up to a third of the market.

Confusing the situation further, YouTube has said that it will block artists whose labels don’t agree to terms but only in certain regions, while also keeping the field open to unsigned bands. As a consequence, you might be able to watch Adele’s videos in the United States, but not in Turkey or Germany. Where this leaves bands like Radiohead or Nine Inch Nails—who have at times released their own albums without the assistance of labels—remains unclear. Unsigned bands might find themselves hoping to land with a label that hasn’t yet earned YouTube’s ire, or else have to continue going it alone.

It’s peculiar that Google-owned YouTube is launching a service to compete with its own Google Play Music All Access (a name that even the most bleary-eyed focus group have to scoff at). But video is somewhat of a different beast. For many young people—raised on singles, Saturday Night Live clips, and Super Bowl halftime shows—YouTube is already their de facto music service. It’s a place where they come to make their own playlists, check out music videos, weird covers, and mashups, and share their tastes with friends. It makes sense, then, that YouTube would try to better monetize this audience by enticing them to enter mom and dad’s credit card number.

But YouTube’s rough tactics clash with its self-generated populist aura. This is, after all, the platform most associated with user-generated media, and with taking everyday citizens and making viral stars, if not mainstream entertainers, out of them. Recently, the Web’s biggest video-sharing site has benefited from a raft of good press. Articles in New York magazine and the New York Times have touted a new generation of video stars, a select few of whom make millions. At the same time, residents of some big cities may have noticed the emergence of a new ad campaign pushing some YouTube-made lifestyle and fashion video-bloggers. The New York City subway system is currently plastered with these advertisements, and their message is clear: this is a new kind of American success story, and it can be yours, too.

But the long tail benefits are scarce for those beyond those few stars who are already famous. And YouTube has acted poorly in its dismissal of indie musicians, the very demographic—heavy on cultural capital but short on revenue streams—that they should be courting. (Some of these “indie” musicians, like Jack White and The Arctic Monkeys, are also pretty famous in their own right.)

These same musicians have complained for years that the royalty rates paid out by streaming services are pitiful, and they’re right. Even with growing numbers of paid subscribers and ad revenue, streaming services have failed to provide meaningful income for most musicians. The tech industry’s counter-argument tends to be that musicians should seek out a wider variety of revenue streams—like merchandise, live shows, commercials, and soundtracks. That is certainly a prudent strategy, but doesn’t make up for the fact that streaming services have destroyed the value of what should matter most: the music.

Exactly how much a band gets paid for having its music appear on these services is a matter of dispute. When I reported on the nascent streaming industry more than two years ago for the Christian-Science Monitor, agreements between companies like Spotify and labels and publishers (the outfits that help distribute royalties) were mostly secret. Some bands looked at their meager royalty statements and tried to decipher the math; one found that a full spin of an album would net them only 4 cents. Rates may have increased since then, and they do vary across services; YouTube may be in a position to offer slightly higher royalties for videos that a user would presumably be looking at, rather than playing in the background. (Yahoo’s forthcoming music/video streaming service is reportedly touting its higher payments.)

Despite its shaky economics, the expansion of this industry indicates that someone sees a profit in it. That someone just tends to be platform owners, operating at the expense of musicians. Companies like Rdio and Spotify work at scale, and they benefit from both the occasional paid subscription and from serving up millions of ad impressions. Google, the biggest purveyor of ads in the world, has spied a similar opportunity. Unfortunately, like Amazon, it is acting more like a bullying monopoly than an open platform.

This development from YouTube, and its parent company Google, is yet another reason to think that today’s new media behemoths mostly resemble the old Hollywood studio system, when performers were beholden to whatever terms their employers offered them. This time, musicians find themselves on the same side as their labels, who, perhaps in some karmic retribution for years of gouging talent and customers alike, find themselves desiccated, left with little bargaining power.

Who then will stick up for the talent, whose artistic product (sorry, content) this whole system is built upon? The most radical act a music fan can perform these days is something rather traditional—buy an album. Vote with your dollar, not with your attention. Google has already captured the latter.