Google company YouTube has been under serious fire from record labels and content creators over the estimated revenue earned and those paid to creators. A recent study shows the difference in payments between YouTube and other streaming services – Spotify and iTunes.
“Advertising-supported platforms like YouTube are important to the music eco-system and music rights-holders should be grateful for their consumer reach and investment in label tools like Content ID,” says Jason Peterson, GoDigital Chairman. “However there is a gap between what paid music streaming services and free ad-supported services like YouTube (and Facebook) deliver in terms of revenue per stream to music rights-holders.”
In August 2017, YouTube Global Head of Music Lyor Cohen stated that YouTube delivered a N1200 CPM to music rights-holders. However, a survey by GoDigital discovered that only about 40% of video playbacks have an advertisement served, which means that 60% of video streams are unmonetized.. Therefore, the effective CPM (eCPM) on all video streams is actually N370, and not N1200.
YouTube vs Spotify
- In data sampled for August 2017, GoDigital found that Spotify had an ad-supported eCPM of N760 and a paid subscription eCPM (revenue/1000 streams) of N2200. Therefore Spotify is paying approximately 75% more than YouTube for its advertising-supported model and 515% more for paid streaming.
- Since the majority of Spotify users are free ad-supported users, Spotify had a blended (free and paid) eCPM of N1000 in the data sampled, which is more than twice the rate YouTube pays.
YouTube vs Apple Music
- Apple Music’s payment stands at N2300 for its eCPM.
Advocating For A Fixed Rate CPM
“One way rights-holders can close the gap in value delivered is to charge a fixed CPM (cost per thousand views or streams),” argues Peterson. “This fixed CPM could be fixed and based on each agreed upon business model and territory irrespective of the platform. In the future Apple, Google and Spotify could pay the same on a per stream basis.”
“The retailers control their platforms and reap the benefits of their success (such as enterprise value in the stock market). Rights-holders on a rev-share don’t control the platforms or reap the rewards of success yet bear the risk of platform failure,” he concludes “The fixed CPM strategy aligns with the risk/reward tradeoff in that it shifts the business execution risk to the platforms and away from rights- holders.”