Streaming’s Elephant In The Room

Music Business World:

If you missed it, video music streams – YouTube with a bit of Vevo, essentially – were bigger and grew faster than audio streaming services in 2015 {according to recent Nielson data}. That’s all audio streaming services combined – including AOL, Beats Music (RIP), Cricket, Google Play Music, Medianet, Rdio (RIP), Rhapsody, Slacker and Spotify.

In 2016, then, the music business’s quest to restrict YouTube’s dominance of ‘free’ music looks like a bigger challenge than ever before. “This is absolutely the legacy Lucian {Grainge} is determined to leave,” one ally of the UMG boss recently told MBW – referring to Grainge’s recently-inked new contract with Vivendi. “Getting ‘free’ under control and dealing with the YouTube problem is his No.1 business priority.”

Yet there might be one more ace up the sleeve of Grainge and his old mentor Doug Morris. Sony and UMG are both major shareholders in Vevo – a platform that’s part-rival, part-partner, part-moneymaker and part-irritant to YouTube.

As many have pointed out, if Vevo’s YouTube relationship fell apart, it would be a in a world of pain. Lots of people can’t even distinguish between the two brands. But what’s often overlooked is that the Vevo/YouTube balance is more reciprocal than many appreciate. According to ComScore, Vevo uploads bring in around 38% of YouTube’s monthly traffic. (Videos from Warner Music, which isn’t an investor in Vevo, independently attract another 20%.) Messing with Vevo means messing with a significant chunk of YouTube’s existing $9bn annual revenue.

With all this talk of Spotify and publishing lawsuits, YouTube’s dominance in the free arena remains the hulking elephant in the room. Personally, I’m much more eager to see them reined in than Spotify.

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