YouTube is a video sharing website on which users can upload, share, and view videos, created by three former Paypal employees in February 2005.
The company is based in San Bruno, California, and uses Adobe Flash technology to display a wide variety of user-generated video content, including movie clips, TV clips, and music videos, as well as amateur content such as video blogging and short original videos. Most of the content on YouTube has been uploaded by individuals, although media corporations including CBS, BBC, Vevo and other organizations offer some of their material via the site, as part of the YouTube partnership program.
Unregistered users may watch videos, and registered users may upload an unlimited number of videos. Videos that are considered to contain potentially offensive content are available only to registered users 18 and older. In November 2006, YouTube, LLC was bought by Google Inc.for $1.65 billion, and now operates as a subsidiary of Google.
As record labels, digital music stores, and music subscription services continue their struggle to convince music fans to pay for music, Google’s YouTube — itself a major repository of recorded music — claims that giving away music for free generates as much money for copyright holders as charging for it, with profound implications for freemium digital music services such as Spotify and the much rumored Google music service.
They said the growth was due to traffic increases, particularly on mobile phones; more profitable, optimised ad formats; the “Ad Word”-isation of video content (Adword is Google’s main advertising product and main source of revenue. Google’s total advertising revenues were USD$28 billion in 2010. AdWords offers pay-per-click (PPC) advertising, cost-per-thousand (CPM) advertising, and site-targeted advertising for text, banner, and rich-media ads.); a new crop of curators who increase free music videos through blogs and social networks; more effective sales teams, particularly as part of Vevo (a joint venture between Google, major labels, and Abu Dhabi); and YouTube’s Content ID system, which allows music copyright holders to profit from infringing use of their songs.
A few back-of-an-envelope calculations suggest that for seven billion streams of music to financially equal 175 million single downloads (assuming a download costs 79p), the per-stream fee “paid” by the user (either in terms of advertising value or subscription fees) would need to be around 2p per track.
In reality, per-stream costs for a label like Universal are a fraction of that. Andy Malt, editor of music industry newsletter CMU Daily, told Wired.co.uk: “At the moment, 2p per stream is not even close to what anyone’s getting. People complain about how low it is — we’re definitely talking fractions of a penny, though it’s claimed that major labels get much better rates than independents.”
Of course, it’s not quite as simple as 2p — the proportions that go to the artist, record company, publishing company and others vary wildly between different types of service, different labels, and even different artists. Malt added: “What proportion of that money goes to the artist depends on their various deals — they could see anywhere between eight and 50 percent from their label, plus they’ll receive another amount in publishing royalties.”
As such, don’t get too hung up on that number — it just gives some sense of the idea of the worth of a stream compared to a download (far, far less). But if you get enough of them, and if that number is going up as rapidly as it is at the moment, then perhaps a label can still stay afloat on streams alone.
The music industry doesn’t seem to be realising the trend. Fortunately, some smart music bands have sensed the pulse and are going with the flow. What do they do? They give their music away for free.
Nine Inch Nails, a music band that I haven’t heard of until recently, released their album Ghosts I for free on their website. What followed was tremendous online buzz. In the week alone, over 800,000 people downloaded their music.
What follows next might surprise you. They ended up making a direct profit of Rs 6.4 crore ($1.6 million) in just one week alone. How can a music band make money when they are giving their music away for free? Here’s how.
While they had a free download option, they also gave a choice to their users. For Rs 200 ($5), users could go to the Amazon store and buy all the four digital albums instead of just getting their first album free.
For Rs 3,000 ($75), you can get two audio CDs, one data DVD with all 36 tracks in multi-track format, a Blu-ray disc in high-definition stereo and two hardcover books. It appears there was sizeable interest from people willing to pay money. Rs 6.4 crore in one week isn’t too bad!
But that’s not the real benefit. The biggest benefit is the positive buzz and publicity for the band. A quick search in blog search engines like Technorati and Google will show so much is being talked about this band.
Companies would kill for such kind of positive buzz for their products. They gained a lot more new audience which can be very vital for the success of their future music productions.
Another popular rock band, RadioHead, cancelled their contract with their music label and gave their new album In Rainbows for ‘whatever price you are willing to pay’. That’s right. They ask you to name the price for the album and yes, it includes ‘free’ as well. Guess what? They ended up making an estimated Rs 24 crore ($6 million) in sales.
What these people don’t get is that just because someone downloaded their music for free does not mean that he or she would have paid for it. This is an audience who prefers NOT to pay. Instead of letting them rip the music illegally off torrent sites, the bands make it easy for them and in return they earn their goodwill, loyalty and support, something that’s vital for any successful music band.
I personally agree with Google’s Youtube’s statement that free music can pay as well as paid music. Because me, myself, is a big lover of this site and everytime i found new song lists, i will check them out in YouTube first.
People (mostly teenagers who love music) don’t really watch TVs these days. They mostly spend their time in front of their computers or laptops. That’s why, uploading music or videos that can be easily watched from the internet is the most effective way to make people recognize it.I will mostly play the song repeatedly before i download them and if i really like the song and the singer, i will download it in iTunes for better song quality (which can make profit to the website and the singer) or buy the original CD. And again, by listening to the song easily just with streaming it in Youtube can make people more loyal to the singer, and support them. This is how the singer can actually make bigger profit.
This statement is not only for those singer who had their popularity already, but also for independent musicians. There are a lot of independent musician that posts their music on Youtube and gain much popularity, though they are not singers from any label.And only by posting them, they can even sell their own published CDs, upload their own song in freemium services, and receive money from it. For example : JR Aquino, Sam Tsui, David Choi, etc. If they are lucky and good enough to be found by music producers, they can even be recruited to a black label. I think these examples should be enough to support Youtube’s statement and I hope it widens your view about the article.
Source :
http://en.wikipedia.org/wiki/AdWords
http://en.wikipedia.org/wiki/YouTube
http://www.rediff.com/money/2008/mar/24music.htm
http://www.wired.co.uk/news/archive/2011-02/16/universal-music-streaming
http://www.wired.co.uk/news/archive/2011-02/04/youtube-free-music-pays-well
JEMIMA ROSELYN – 04PFO – 1301033690