04.14.16
Let them eat cake
A recent article from the New York Post on profits from digitized music, here, presents us with a “let them eat cake” moment, courtesy of Robert Kyncl, YouTube’s chief business officer.
YouTube is vilified because it returns zero to little profit in its glued-on advertising/revenue sharing schemes. “The main concern is the fact that ad revenue is not climbing in line with views,??? one industry source says to the Post.
Kyncl, so it says, countered:
“free is the future, ad supported is the future …??? on YouTube’s scheme known as “monetization” and “revenue sharing.”
“Only about 20 percent of people are historically willing to pay for music. YouTube is helping artists and labels monetize the remaining 80 percent that were not previously monetized.???
Let’s roll out what this really means.
What Google/YouTube does is what’s known as a “winner take-all” system. While YouTube, Apple iTunes, Spotify, etc have demolished barriers to entry in putting out music, the data is in on the results over the last ten years and, invariably, what is returned is highly unequal economics.
And it’s described by what’s known as a long-tail distribution. Martin Ford, in his recent book, “Rise of the Robots,” describes it like this:
“[The ubiquitous] long-tail distribution is central to the business models of the corporations that dominate the Internet sector. [These companies] are able to generate revenue from EVERY POINT on the distribution.”
It’s become obvious, though, that YOU (meaning the majority) cannot.
Ford goes on:
“Markets in goods and services [books, music, for example] that are subject to digitization inevitably evolve into winner-take-all distribution. Sales of … books and music are increasingly dominated by a tiny number of on-line distribution hubs …
“The long-tail is great, if you own it. [Like YouTube, or Spotify]. When, however, you occupy only a single point on the distribution, the story is quite different. Out on the long-tail, incomes from most on-line activities rapidly drops to zero.”
It’s not an opinion, it’s supported by all the data on sales and profits now in.
So when the Google YouTube montebank says this, “YouTube is helping artists and labels monetize the remaining 80 percent that were not previously monetized,??? you’re only getting part of the story.
What you’re getting is more like the pic of an iceberg, with a little showing above water, and the rest of it, that which is going to rip a hole in your bottom, unseen.
See – almost 100 percent, or eighty percent, or 50 percent of almost zero, which is what Google\YouTube returns to you, is still almost zero. And 80 percent of even 100 almost zero streams is still pennies. You only make money if you own a piece of ALL OF IT, globally. Which, in the case of YouTube music, Google/Alphabet/Whatever does.
No amount of wishful thinking about turnarounds and the sun coming up in some near future can change any of it. The installed system has you screwed. Period.