Is youtube detrimental to record sales?

Great Debates
1

I’m not sure how great a debate this is but I’ll give it a go.

I know lots of record labels now use youtube videos for promotion but I was thinking that youtube (and of course other streaming video portals) may have some detrimental effect on records sales, that is that it might make you less apt to purchase a song.

Unlike peer-to-peer networks youtube requires no extra software with potentially dodgy malware attached. You just put a song name or band name in the search box and click and away you go.

As well as having alot of the most popular songs of the moment with the videos etc there are also lots of classic gems, cult songs, etc. that might be hard to track down by other avenues.

Although the sound quality is an issue for some, I doubt that bothers many people. Kids around here listen to songs on their tinny mobile phone speakers and have no problem enjoying them.

At several parties I’ve been to recently people have hooked up their PCs, laptops and the like to speakers or PAs and used youtube like a jukebox. People looking up all sorts of curios or sing along songs or just dance tunes.

I suppose on the positive side, youtube does make people aware of acts that they might not have found out about through other channels but I don’t know is there a statistic available for how many of these listeners to “new” music will purchase a cd or download. Hit songs are played in heavy rotation on music channels and on the radio and people still seem to buy these songs so maybe youtube works to the same effect for the artists.

I know this is just supposition but does anyone see anything I can’t, anything wrong with my line of thinking or can anyone point me to research that disproves what I’ve said above? What’s your opinion?

2

YouTube or something like YouTube is the future of music. No disks. No music files saved on your hard drive. You just search for the music you want, and click play, and it plays. And everything ever recorded since Thomas Edison is available at the push of a button.

Will it hurt record sales? Of course. Records–that is CDs are obsolete. Even digital music files are obsolete, whether we’re talking about files purchases legally or files downloaded illegally. The business model of creating a digital media file and making money by selling copies of that file is going to go the way of the Dodo.

And the fact that lots of people who currently make a lot of money from this business model will go bankrupt is irrelevant. This business model is not sustainable. There will be a lot of wailing and gnashing of teeth and lawsuits, but the battle is over.

That isn’t to say that there will be no way to make money from recording music. There will be, it’s just that there will be no way to make money by charging people a fixed amount of money in exchange for the legal right to possess a copy of a particular file.

Of course, the downside of this is that even though distribution of digital music is now essentially free, or so cheap that it can be done by volunteers, the creation of that music isn’t cheap. The purpose of copyright law is to advance the useful arts and sciences, the the way this is done is to give the creator of a work the exclusive right to copy that work for a limited period of time. Turns out people like money, and they used to be able to make money by charging people for each copy of a work. Except that’s now pretty much totally unenforceable, and will become even more unenforceable in the future. So that means copyright as a method of advancing the useful arts and sciences is a dead issue. Merely stamping our feet and pointing at the lawbooks that enshrine our current copyright law is useless. Sure, copyright law exists, maybe it would be nice if it still worked, but it doesn’t work anymore, and insisting that it DOES SO work won’t make it work.

So we have to come up with alternate methods of advancing the useful arts and sciences if we want to keep those arts and sciences advancing. There are lots of potential methods we could use to compensate creators, but pretending copyright law was handed down from Mt. Sinai and must continue exactly as it currently exists is just silly. It won’t work.

YouTube is a perfect example. Even if we managed to keep every single copyrighted work off of YouTube, what happens when YouTube and its ilk expands? What happens when the corpus of free material on YouTube is so large that the notion that you should pay to access firewalled material becomes silly? Just like every newspaper eventually realized that charging people a subscription fee to view their online version was a poor business model, eventually music creators will realize that they can’t compete against free music.

We get free music on the radio all day, and no one thinks it’s a scandal, it’s only a scandal if you get to choose exactly what song you want to listen to. The future of music is a digital “radio” that doesn’t push music on you (unless you want that), but one where you can listen to anything you want, any time you want, wherever you want, in any format you want, on any device you want, and at no additional cost.

Now, people will be paid somehow for their contributions. Maybe in the future they’ll only get pennies compared to what they make now. But I suspect that in the future we’ll have a body of work many orders of magnitude greater than we have now, and total money spent on music will be larger than we spend now, and musicians will have the potential to make more money than they make now, but that money won’t usually come via pay to play schemes or pay per copy schemes but through various other schemes. And even if the era of the music star that makes millions of dollars from their music is over (although it might not neccesarily be over), that doesn’t mean that more people than ever won’t be able to make a modest living as professional musicians.

3

I don’t think you’ve explained how music creation will be paid for in the copyright-free world, although you must be right about the current set-up being unsustainable.

But maybe YouTube does show the way. People listen to music on YouTube rather than downloading it, because it’s simpler - it makes the messy and unreliable “download” step unnecessary, and goes straight to “listen” or “watch”. People place a high value on convenience, hence YouTube’s popularity. The interesting thing is that it starts to raise the barrier of entry into the world of free media distribution. For one thing, you would currently need a honking great server farm to serve all the media that YouTube does. But, give it a few years and maybe an enthusiast could hold the entire history of sound recording on his servers. Maybe video too, a decade or so afterwards.

But then the hobbyists face another possibly insurmountable barrier, bandwidth. All those people listening to and watching all your stuff. That is never going to get net cheaper, because more and more people will want to watch it, more often, in a curve that can only rise continually for the next few decades. Only the big boys will be able to sustain that kind of bandwidth.

4

I might as well share my story.

Despite being born in 1986, I grew up only being interested in 50s to 70s rock music. I thought the West Coast rap that my classmates listened to was the stupidest crap ever. (I grew up on the East Coast, BTW; it’s just that when I was in elementary school, Dre/Snoop/etc. were the shit, everywhere.)
I finally discovered Napster in 2000, right before high school. At that point I actually started listening to new music, and I loved it. I went out and bought CDs from contemporary bands for the first time, and I got quite a number of them, for my economic position anyway.

Not long after that, the RIAA started going nuts over Napster, got it shut down, and started prosecuting people for “stealing” music on the Internet. I felt hurt by it, since Internet filesharing was actually how I became a customer of the record industry, and I felt like they were putting their short-sighted platitudes ahead of my business. I haven’t bought a CD since. My boycott will continue until they stop prosecuting Internet file-sharers. They can win my business back at any time by giving me an incentive to use Internet file-sharing as a way to discover bands I want to support, rather than the primary way to acquire new music.

5

I’d actually said that this was the best thing for record labels to do like a decade ago is to market one song (with a video) from every CD as free to play and share and then charge for the other songs. All the songs without videos won’t make it to YouTube and there will be enough safely shareable songs that people won’t need to hastle with finding more stuff through illicit means.

6

Based on the rest of your post, I’m not accusing you of this, but I feel like this phrase is used too often as a rebuttal to the the argument that technology and the internet have killed the business model of selling songs and albums. “I won’t accept your report that the industry is broken, unless you can also tell me exactly how you’re going to fix it.”

I think the Forbes annual list of highest paid musicians is extremely illuminating. As a mental exercise, look through this list and imagine how much it would or wouldn’t change if each of these people lost “album and song sales” as a source of income. Probably not very much – the highest-paid musicians make their money from touring and side businesses. You could almost say that record sales are just a way to reimburse the record companies for the PR they provide by promoting and distributing an album.

I think that will be the last whimper of record companies in the 21st century – they’ll be little more than PR firms that support a musician’s core business of performance. I think if you looked at the full universe of professional musicians – classical, folk, regional and local rock bands, and A-list superstars like the Forbes list, that’s already the role they’ve been relegated to.

7

The RIAA doesn’t release all music. There are lists available online of RIAA products that you can boycott.

8

Admittedly, it’s the old cliche:

  1. Abolish Copyright
  2. ???
  3. Profit!

The only defense is that the current model is exactly the same, except step 1 is “Keep Copyright”.

There are ways that creators can make money from recorded music, even if it’s something like the tip jars that some blogs have. “If you liked this song, click this button to give us some money.” Make it really to spontaneously give tips electronically and maybe we’ll find that voluntary payments can work.

Or my favorite model, just include a mandatory user fee of, lets say, $10/month added on to all ISP bills, and that $10 pays for access to all content available anywhere. And tracking software keeps track of every song or book or movie or old TV show you play, and marks a tally. At the end of the month creators divvy up the global pot of $10 fees based on how many times their content was played that month. How to protect the tracking system from gaming the ratings is left as an exercise for the reader.

Or a patron model. A group of private or public patrons pay creators to record a performance, and then that performance is added to the public domain. Private patrons currently subsidize things like public radio and TV, theater, classical music, and so on. And governments support such things too. This merges into the “tip jar”.

Or something else, which I haven’t thought of.

And of course, there’s the possibility that recorded music will just have to be considered promotional material for live performances. Big name performers make big bucks for tickets to live shows, medium name name performers make money from the bar/club/coffee shop’s cover charge, and no name performers perform for free with a hat on stage for people to put money in.

9

I’m interested in models such as this. Here (PDF file) Stan Liebowitz writes about this in a paper called “Alternative Copyright Systems: The Problems with a
Compulsory License”

Given the business climate would the industry powers that be not be more likely to use tracking like this to force the ISPs to prevent users accessing illegal content?

10

Except how can such a tracking system be enforced, if users don’t feel like complying with it?

In my idea, it would be trivial for users to disable the tracking system, or download files so that they don’t get tallied. But there would be no reason for them to do so, since it wouldn’t save them any money or hassle. Only paranoids and assholes would bother disabling the tracking system because there’s no benefit for an average person to disable it, it works invisibly behind the scenes. The real threat would be people hacking it to prove that 10 billion people accessed “songs_about_my_balls.mp3” last month, so now I’m owed $10 million.

The big media companies can only enforce unauthorized access if most people find it more convenient to use a cheap and legal scheme. Remember that there are plenty of other countries in the world, and their governments have no interest in enforcing American copyright schemes. If all these files are hosted in China, India and Russia, how can it be enforced without the media companies controlling everyone’s computer? They would have to make general purpose computers illegal. So some Russian guy sets up a server farm and serves music files to America, and makes money from advertising or something else, and what can the RIAA do except make it illegal to go to webpages in Russia. Or you don’t even need a server farm, the files can be hosted on random home computers.

The celestial jukebox probably won’t be some server farm, it will be a distributed network coupled with a front end that efficiently finds the files you want. And those files could be streamed from any computer anywhere in the world, the user accessing the file doesn’t know and doesn’t care…they might cache a few dozen terabytes of files that they access frequently locally, but it doesn’t matter where the hard drive is located physically as long as they can access the file seamlessly anytime they like.

If it’s easy and cheap to access everything legally, then legal access will be the norm. If it’s expensive and a hassle to access everything legally, then the legal network will be an afterthought and the illegal/dubious/free network will be the mainstream. And don’t forget, a large fraction of the content–maybe even most–on YouTube isn’t uploaded illegally. If lots of people start uploading music for free access, just because they like music and want an audience, then pretty soon the commercial market will be dwarfed by the volunteer/public domain market.

Remember, we already listen to tons and tons of music today without paying a thing for it, or without paying a thing extra for it. Walk down the sidewalk and the coffee shop is playing music, and you can listen to it. Listen to the radio. Turn on you cable TV. Go to a struggling band’s website and listen to their demo. Go to a concert in the park, or at the church. Go to the library and borrow a CD. Go to Pandora.com or some other internet radio station.

These free sources of music are just going to increase, and as the costs of distribution and storage decrease they will become more and more ubiquitious. Eventually the media companies will have to figure out a way to make money by giving their product away, or they won’t have any way to make money.

11

This wasn’t the debate I started but I’m interested in your opinions. The coffee shop (here at least) pays a chunk of change to a music rights organisation so I can enjoy songs with my coffee. The radio station pays a chunk of change to a music rights organisation so I can enjoy songs when I turn on my radio. Same with cable TV. Everything you mention except the struggling band someone or some organisation is paying for the “free” music I hear, or more likely I’m paying indirectly for the “free” music. I suppose the main issue then as you’ve said and others have above is how do you make it appear free while having it pay for itself. With youtube and the like presumably advertising is the main method but I don’t know how much if any of that revenue is given to artists/labels et al.

I’m all for the celestial jukebox. I’ve been hearing about it for years now but I don’t know how it can exist in the short to medium term with it being an illegal operation, as you point out, located in a non-US (and non-EU) region.

12

I’d simply say that for the past couple of decades, the music companies have used their positional advantage over the customer to charge an otherwise artificially high price. Money will continue to be made off music, but a lot less of it will be for recorded music than used to be the case.

This is pretty obvious already, with respect to currently legal channels of owning music. Who’s going to pay $16.99 for a CD with 10-12 songs on it, if you can download the best three songs on the album for under $1 each from Wal-Mart or Amazon? YMMV, but the price that will get me to buy the CD has dropped to around $5-$6. I’m certainly not going to, in effect, pay $14 for the eight or nine songs on the album that weren’t good enough to get airplay. Some people still will, but it’ll be a declining number.

My WAG is that people will continue to shell out a fair amount of money for live music, just like they do now. But the ability of artists or labels to make tons of money off a recording in near-perpetuity is going to diminish considerably.

Such is life. I taught college for 15 years, as grad TA and full-time faculty. I’m not earning any royalties off recordings of my ancient lectures, and very few teachers are. Yet people continue to teach. I don’t expect a reduced income stream from recorded music to make a big difference in the quality of popular music.

13

On the other hand, a few teachers are. The Feynman Lectures are still sold.

14

In fact, the opposite seems to be true. I recently discovered Jamendo, which is exclusively for free music. I’ve found a lot of good music on there in the last couple of days, and it downloads FAST since they have a lot of BitTorrent seeders.

15

Yes, but let’s face a few facts. Would Feynman have decided not to publish the Feynman lectures if he knew he’d make almost no money from them? If there was a substantial cost to him, probably so. But what if publication was pretty much free?

Add that to the fact that Feynman is DEAD, so any money made by sales of the Feynman lectures can’t possibly act as an incentive for him to create more such works. It can act as an incentive for the publishing company that owns the rights to the work to keep publishing it, but again, what if publishing the work as essentially free, and could be done by volunteers?

We need to separate incentives for creation from incentives for publication. In the past there was a rough correlation between them, but that’s no longer true, so we need to create some other method of incentive for creation.

16

How come Microsoft, Adobe, Id and other companies are still making money? Why is the software business model different than music? It is just a file after all. Whether it is data or music doesn’t really matter and, except for a small number of Linux ‘Software should be free’ advocates, companies are charging for software (just files) and there is no forseeable end to the model. Yeah, I know about the software as a service model but I really don’t see that taking off*, though I could be wrong.

And why are books any different? They are just words in a file. Authors should just make money by, well, I am not sure how they could make money other than book signings and I imagine it that would be a rather poor way to make a living.

I agree that the big music business is going to change. Record labels either need to change or they are going to die. I think artists are gong to get more control and have more opportunities to sell their music directly to the consumers. But they still should have the right to a) control their output and b) sell it if they choose to do so.

The tip jar concept, I believe, is unworkable. Why do I believe that? Well, Stephen King tried it with a book. It failed. King asked $1 per chapter for a book called The Plant. He pulled it because not enough people were willing to pay.

For some odd reason a large number of people do not seem to realize that writing and recording music is work. It takes a heck of a lot of time and effort. The biggest issue is time. If you have to work (like touring) to buy all the normal things in life like food and shelter, there ain’t much time to actually write and record. I know, I’ve played professionally and toured in the past and presently write and record around my work schedule. I don’t get jack done because I am too busy doing other stuff so I can eat (and buy more gear). Oh yeah, the gear ain’t exactly cheap either.

Did you ever think that maybe Feynman, being a rather smart man, thought ahead about what should be done with his work after he died? Like maybe the money should go to his family? Or that, while he was alive the incentive to create the book in the first place was so that he had money for his family upon his death? He could have set up his estate to give his work away upon his death. I imagine there is a reason he didn’t do that.

Slee

17

I think it is comparable to sports teams that try to keep their games off regular TV. It is shortsighted. You have to develop an audience. If you are not exposed to the music or the game ,you are not likely to seek it out on your own.
The computer can give an artist a much bigger audience. For a new group ,it is a great opportunity.
Record companies loot artists. They want to keep that in place.

18

The net result in the long run will be less recorded music. Free downloads will be used by the bands for self-promotion or as part of advertising campaigns for other products, but most bands will make most of their money off live performances and merchandising. Why should a band go to the trouble and expense to produce studio-quality recordings of all their songs if they’re never going to make that money back? They’ll just record one or two of their catchiest tracks to get people to show up at their club gigs.

Good news for people who like live music. Bad news for people who like to listen to music on their iPods.

19

But how much longer will this software business model be sustainable? What will the software market look like in 10 years? How many people really want a new operating system, or a new version of Office, or a new version of Photoshop? It seems to me that we’re reaching a plateau, where the latest version of the standard applications is only marginally better than the previous versions. And free alternatives exist. Microsoft is extremely concerned about Google eating into their core money makers.

It’s not that I think software should be free, it’s that the marginal cost to distribute one more copy of an already existing application is near zero. And if a ten year old application is almost as good as today’s version, where’s the incentive to buy the new version? And the guy who created that 10 year old application can still make money, if the new version is $100, he can sell his old version for $1 and it’s better than not getting anything. It’s better to sell ten copies at $1 each than zero copies at $100 each.

The key conceptual shift is that technology makes distribution so cheap that business models that were impossible in the old days become possible. And providing your product or service so that it’s free to the end user and paid for in some other way than the end user paying per copy or per use becomes possible. And businesses that can figure out a way to do this will drive business that stick to the old model into bankruptcy.

20

In a way, it’s a good thing that MS products are such a hassle because it pisses people off enough to switch to open-source stuff like Firefox etc.