Youtube and the PRS

Having sat and watched the debacle between PRS and Google unfold this week I have found myself amazed at the reaction both in the press and media and around the blogosphere.

An interesting part of all of this has been the lack of explanation around the over riding issues. The news of music videos being pulled by YouTube was widely reported in the mainstream media this week and I have a sneaking suspicion catapulted PRS for Music from an organisation that few people outside the music and entertainment industries had ever heard of to the universal known party pooper of the digital content world. I personally think there are far more important issues highlighted by this fiasco about how artists in a digital age get paid for their work by new media companies.

Readers probably do not need reminded that YouTube is not a trivial website.  Figures published by independent firm comScore within the past couple of weeks estimate YouTube has been serving over 100 million videos per month since January 2009. Using black magic and some interesting data collecting techniques Beer Planet reckoned that in August of last year YouTube was hosting somewhere in the region of 144 million videos of which 19.8% are music videos (Media Tech Cultures).

So the short and long of it seems to be that YouTube has a pretty hefty selection of official and unofficial music videos, effectively turning the site into the world's biggest jukebox with a selection of dance videos, live performances and lip sync renditions by every kid with a webcam. The problem with all this music floating about on the internet is that the artists want paid, well, technically at the moment its the publishing companies through their collecting society, who are wanting paid. If you look back at my previous blog entry you will find me exploring the ins and out of the music copyright system and hopefully get an idea of the issues involved and which industry rocks the money is to be found under.

If you did read my last blog post you will understand the hoops and licenses that content distributors have to jump through to "correctly compensate" artists for the music which they use. With Re:place Radio we have had to adopt a podsafe approach, exempting the artists' of every single track we play from their PRS and PPL obligations. So where is the money in the system? Should artists be looking at YouTube as nothing more than a marketing opportunity with an associated cost?

Simon Pursehouse in his latest blog entry, goes into the economics of having your music video on YouTube. He sights the aritcle of EMI artist Beth Orton, speaking out in favour of the PRS campaign and then uses his own experience with a Sentric artists figures to show what he sees as wrong with the current system. The nameless Sentric artist he covers has had one of their videos played on YouTube "38,175 times during a quarter last year" for which they made a staggeringly low £2.62.

It is figures such as this that most of the media, the PRS themselves and my friends in the blogosphere use to justify the position "YouTube is evil and doesn't pay artists enough money" but I feel that artists need to look at not only YouTube but the digital media revolution from a different perspective than they are used to. The business models which previously supported media organisations are crumbling beneath the artists who rely on them to pay the rent.

As digital media distribution has given us more opportunities to access content than we ever thought possible the old style economic media models just don't stack up anymore. Going from the figures reliably presented by Sentric and as I covered last blog, getting your track played on BBC Radio 1 will get you PRS revenues up to £18 per minute. That's grand, but how many BBC Radio 1s are there? One. How many tracks can Radio 1 play at the same time? One. So the idea that there is a huge pay out for being lucky enough to be played on Radio 1 kind of makes sense, you are being played, exclusively, to an audience of millions. Life gets more complicated when you take into account that the BBC is in the lucky position of being licence fee funded and has negotiated a blanket licence with the PRS to cover the vast majority of its music usage.
 
So lets look at the new media businesses. Services like Pandora have hit the headlines repeatedly as the music businesses in their many guises have tried to tap them again and again for higher revenue. But if the likes of Radio 1 get its money from the Great British public to pay their artists where is YouTube getting its cash? As with most Google businesses the entire set up is monetized through ad revenue.

Trying to work out the amount of money floating about in YouTube / Google ecosystem is a bit of a sport amongst digital media watchers but given the lack of official figures from Google I can only share with you a few of the many figures I found floating around the web.

The first thing to clear up is that advertising across the web is sold on a CPM basis (cost per thousand) where the "M" comes from the roman numeral for thousand. So what is the CPM for the internet's biggest video site? According to some of the sources available it seems to be incredibly low. The big YouTube news this time last year was that it had distributed $1m in revenue through its partner programme. As part of this $1m a $1,600 cheque went to the makers of Break a Leg, an internet only sitcom with over 2 million views. This equates to a shockingly low CPM of $0.80. So there's a pretty clear argument that says there's just no money in being on YouTube.

So what do I think that the PRS should be doing to get more money for their artists? Well for a start they shouldn't be looking for more money where their obviously isn't much money to begin with. YouTube might have the deep pockets of Google behind it but if YouTube isn't raking in the dough then what can we expect from our other ad supported digital providers? Surely they should be looking at ways of generating more money from their content. Look at Seth MacFarlane and his comedy cavalcade, by working with a sponsor and employing pre-roll adverts which match and work with the content he has directly monetized the content. Shouldn't managers be looking at ways of building meaningful brand partnerships so that audiences are accepting of advertisements which they realise pay the artists?

Lets not forget that music artists could quite happily be looking at YouTube as a means of simply advertising their other products. The likes of Monty Python have signed up to YouTube's click to buy programme which ties the streaming videos to opportunities to buy other content such as mp3 downloads and videos from the likes of iTunes. Monty Python came out and said in February of this year that sales of their DVDs had soared on the back of their YouTube exposure. Not all artists have the same market potential as someone as long in the tooth as the Monty Python gents but the money making potential should not be ignored.

So what should the PRS be looking to do?

Well having videos up on YouTube as marketing for other products can only happen if they videos are up on YouTube to begin with. The reinstatement of the content has to be their first priority. A sea change in the entertainment industries which makes them to not fear new content exploitation opportunities but instead embrace them would also be nice but probably isn't going to happen.

I also believe that labels and managers should be more savvy about the marketing opportunities YouTube provides. It is important to remember that even if you only take YouTube as a way of reaching a potential audience it gives not only detailed statistics, the opportunity for viewers to subscribe to receive more your content but also a feedback channel with its comments.

YouTube, on a purely utilitarian level, is a free service providing everything marketeers cannot get from mediums like TV. Since the dawn of internet advertising advertisers have realised that statistics and details about those viewing their adverts not only allow them to be better targeted but also allow them to be more intelligent about the way that they pay for media buys. Something long elusive in the old media world is a sure and steadfast return on investment from the advertising money that businesses are spending. Mediums like web video and podcasting give marketeers a glimpse of this possibility.

If artists are looking to make money from YouTube then they need to see it simply as a way of promoting their other products. sP's Sentric artist might only just be able to afford a pint with her publishing revenue from YouTube but have they sold gig tickets, CDs or iTunes downloads on the back of people accessing the music?

Artists have to look at YouTube not as a way of generating huge publishing revenue but as a promotional tool and as a way to get people to buy their products. If the PRS do not back down and YouTube do not get the videos back up then all that has really happened is that artists have lost a way of interfacing with their audiences.

When the labels, publishers and their collection agencies look around and see where else they think they can squeeze money out of the digital market then they seriously run the risk of killing off music on YouTube. Will we one day wake up and find that Myspace, Pandora and Last.fm couldn't afford to pay their collection agency bills? Will digital media businesses be allowed to continue distributing music to the masses or will the old school establishment drag their heels until the digital innovators can't be bothered trying any more?