Written By: Jim MarkunasSure, I like to watch "Office Freakout" and other viral video classics, as a consumer of online media, but... were I a band or record label, I would shun YouTube just like the Warner Music Group did earlier last year.
YouTube has great viewership, and is as much of a household name as Google.
However, just because something is popular,
1. No Ad Revenue!!!! -
it doesn't mean that it's right... or that it's right for your brand or business.
I'm going to discuss the four biggest pitfalls of using YouTube to promote music videos and various other intellectual property.
I've been told by a few record execs that they've "worked out a 'deal' with YouTube," or are "in talks with YouTube to work out a 'deal.'" So what?
Just because YouTube has good intentions, doesn't mean that they're going to suddenly become an overnight source of income. Let me show you how money is lost by posting any intelelctual property on YouTube.
As you can see in my picture on the left, Hannah Montana's "7 Things" video, garnered over 65,000,000 views.
As you can see in my picture on the left, Hannah Montana's "7 Things" video, garnered over 65,000,000 views. Although this is great publicity; publicity doesn't necessarily make money.
Had Hollywood Records decided to go with a video service willing to offer a $3 CPM for video viewership, they could have made bank on this video with a projected profit of $196,000.
Split between the label and the artist, as most contracts allow for, that would have been roughly $100,000 in revenue for the label (enough to recoup the video and then some) and $100,000 for the artist.
There are viral video sites out there that offer a paid model for music video views. Although some of these other sites don't quite have the viewership that YouTube has, I can only reiterate the #1 rule of financial accounting: "$1 today is better than $0 tomorrow."
2. No Sales Leverage -
You've seen them... pop-up affiliate ads that attempt to coax YouTube viewers into buying the MP3 version of the music video being streamed. This "last ditch" technique is both intrusive and ineffective, and will not:
A. Convince consumers to pay for music.
B. Correlate the relationship between YouTube views and record sales.
In addition, an artist can have 1,000,000 views on YouTube and not sell any albums or singles. This phenomenon happens not only because people aren't inclined to pay for something they can get for free, but also since YouTube is not seen as a viable retailer by consumers. What is the "carrot on the end of the stick" for consumers watching a free music video? There really isn't one if you think about it.
3. Pirated/Duplicate Content -
Ok readers, let's say you and I have a record label with 4 hot artists. For argument sake, let's say we have Madonna, The Red Hot Chili Peppers, U2, and the Foo Fighters. In an effort to get on the "publicity train" we post their current singles in video form on YouTube.
It seems that the day after we post our videos, YouTube users not affiliated with or employed by our label have posted the same music videos on their user accounts, thereby retarding our number of views.
I'll tell you why this is a problem... Not only is it a copyright infringement, but in turn, the duplicate/pirated content detracts from our label's number of views. Imagine that we do have a CPM/ad-share deal in place with YouTube.... We've essentially lost money to pirates (again).
YouTube doesn't have the same top-notch copyright standards that other viral video sites have.
4. They're Just Not Good Businessmen -
I can't in good conscience recommend a site that can't keep itself solvent. According to Google's annual report, YouTube is operating at at $470 million a year loss. Maybe we music biz folks like YouTube because YouTube's bad business sense makes us look like financial gurus. Yes??? Maybe?? (Crickets chirp as people give me dirty looks).
**Author's note: I apologize to my constituents for the harsh words.
I do believe we can work together to make music videos and other intellectual property profitable via the internet. I've covered this extensively in my New Media Plan. Before you watch the video, feel free to e-mail me for an interview. I promise I wont harm your office.
Unknown Said,
Jim:
You're forgetting one thing: Music Videos are NOT a product anymore.
Nobody buys music videos at Target. They won't even pay extra for a music video when bundled with an album - if they did, iTunes wouldn't be giving them away. And selling them through the iTunes store was a joke.
Yes, YouTube is cheapening video. Just like iTunes and Napster did to the full-length album, like Wal-Mart is doing to live ticket sales, and Myspace is doing to music in general. But all these things are doing something very substantial: making music more accessible by making it easier to distribute and easier to find. Which helps artists find an audience, something that must be done before they ever hope to solicit sales from those people.
Sure YouTube is losing money. It went bankrupt long ago. But even though it was and still is losing money, the most powerful company of the 21st century thought it was still worth buying. Why? Because it offers something more than money.
Community. Exposure. Interactivity. And for artists, new fans. Marie Digby can sing a song on her iMac and land a record deal while Linkin Park keeps you updated on their Tokyo tour between albums.
Bottom line: MTV doesn't play videos anymore, and VH1's playlist is dwindling. Videos have become extras for CD's and digital downloads, legitimizers, and fodder for placement on the high-def TV's in the Home Entertainment section at Best Buy.
But definitely not to make money. It's another form of marketing. And nobody is complaining because they aren't getting paid by the advertisers for their highway billboard. Marketing pays off in time, with sales.
Posted on April 10, 2009 at 8:17 PM
Michael Said,
I have to agree with you, even though I'm sure you know that what you are saying is very unpopular even - curiously - within the music biz (see Dustin's comment). There's another major issue: accepting significantly lower performance fees on YouTube considerably weakens PROs' position when negotiating with television and radio. Why should they be asked to stump up real money when YouTube gets a favoured deal?
Posted on April 17, 2009 at 12:46 AM
jim@jimmarkunas.com Said,
Very good points... but you must remember. You can offer music videos for free to consumers, as long as you remember to embed ads in the video. (See any day after television episode on NBC.com). This way, videos are still free to users and in turn they make money for labels and artists.
Posted on April 27, 2009 at 2:46 PM