Apple's Trent Reznor says YouTube built on stolen content, pushes Apple Music

Posted:
in iPod + iTunes + AppleTV edited June 2016
Rockstar-cum-Apple executive Trent Reznor spoke out against YouTube this week, calling the free streaming platform "disingenuous" and a problem for musicians looking to earn a living, a problem solved by Apple Music's subscription sales model.




In an interview with Billboard published on Tuesday, Nine Inch Nails frontman and Apple Music Chief Creative Officer Reznor said free services leave musicians few opportunities for financial success.

Unlike clear-cut music economies built on physical media sales, the current landscape dominated by intangible digital platforms is difficult to navigate for even the biggest artists. Poorly regulated free-to-stream services, including those that allow users to upload potentially unlicensed content on their own, are among the many problems musicians must grapple with in this brave new world.

When asked about YouTube, often criticized by music labels for freely disseminating content without implementing a proper set of checks and balances, Reznor delivered an expectedly icy response.

"It is built on the backs of free, stolen content and that's how they got that big," Reznor said. "I think any free-tiered service is not fair. It's making their numbers and getting them a big IPO and it is built on the back of my work and that of my peers."

He went on to tout Apple Music as an alternative that returns a sense of opportunity to artists, both financially and in terms of content management. In some ways Apple Music represents a return to the record store business model of yore. For example, like other established subscription services, Apple's solution lays out a well defined per-play licensing structure that, while not as transparent as direct downloads, presents musicians with a clear avenue of opportunity.

YouTube responded on Wednesday, telling CNET fan-uploaded videos generate about half of all revenue it pays out to the music industry.

"The overwhelming majority of labels and publishers have licensing agreements in place with YouTube to leave fan videos up on the platform and earn revenue from them," a YouTube spokesperson said. "Any assertion that this content is largely unlicensed is false. To date, we have paid out over $3 billion to the music industry - and that number is growing year on year."

As previously reported, Reznor was joined by Apple SVP of Internet Software and Services Eddy Cue, VP of Content and Media Apps Robert Kondrk and Jimmy Iovine at the Billboard interview. Of note, the executives again deflated rumors of definitive plans to end iTunes music downloads in favor of a completely subscription-based streaming model.
baconstanglolliver
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Comments

  • Reply 1 of 31
    wood1208wood1208 Posts: 1,806member
    Why Law is not punishing YouTube for participating/facilitating Piracy ? Tell me how Youtube platform different from Pirate-bay and similar P2P piracy sites that hosted stolen contents and let people share without paying to original contents owners or software creators. People upload movies, videos, songs which were ripped off from the copyrighted material and upload on to youtube to share. Contents owner should sue Google for this no matter later Google finds and deletes them. By virtue of providing such platform, Youtube/Google already participated in facilitating piracy act.
    edited June 2016 baconstangmoreckmac_dogmonstrositystanthemanP-DogNCjasenj1dasanman69ration aljony0
  • Reply 2 of 31
    kevin keekevin kee Posts: 964member
    Google can always say 'hey, we have tried to remove any copyright materials.' The problem is, they provide the platform for any sorts of illegal copies to take place instantaneously. Although they did remove them eventually, but that's not in their best interest. Monetizing data from user's click preference on said 'illegal materials' are more important, removing them come second.
    lolliverP-DogNCkermit4krazyjony0
  • Reply 3 of 31
    mattinozmattinoz Posts: 1,000member
    Still really really weird to read Trent Reznor as a corporate employee.
    Sure it's Apple and he has a high level position with lots of authority but still weird.
  • Reply 4 of 31
    cornchipcornchip Posts: 1,190member
    mattinoz said:
    Still really really weird to read Trent Reznor as a corporate employee.
    Sure it's Apple and he has a high level position with lots of authority but still weird.
    You act like you forgot about Dre.
    lollivermattinozargonautlostkiwislprescottP-DogNCjbishop1039Michael Kares#BlameMe
  • Reply 5 of 31
    appexappex Posts: 687member
    Each video, audio or book for one dollar increases sales thousands of times worldwide and stops piracy overnight. A win for all.
  • Reply 6 of 31
    With all due respect, artist payout is so close to zero, streaming on Apple Music is basically free. Only mainstream hit makers can see anything substantial when the payout is .0013 cents per song streamed. An artist would have to reach 23 million streams to make $30,000
    Aniargonautsingularitykermit4krazycornchip
  • Reply 7 of 31
    He's absolutely correct. And Google is being deceitful when they say they have signed agreements with publishers. Because of how the DMCA works, in order for an artist to get a song removed from YouTube that a "fan" has uploaded they have to send a take-down request. Content is uploaded so quickly to YouTube that this becomes an impossible task. As soon as you take down one song, 10 more have popped up. So the publishers have signed an agreement with a gun pointed at their heads because they know they will never be able to remove content from YouTube. Meanwhile, Google rakes in billions in revenue from ads presented along with all this stolen content.
    fotoformatlolliverargonautauxioP-DogNCration albaconstangkermit4krazycornchipjony0
  • Reply 8 of 31
    lolliverlolliver Posts: 314member
    With all due respect, artist payout is so close to zero, streaming on Apple Music is basically free. Only mainstream hit makers can see anything substantial when the payout is .0013 cents per song streamed. An artist would have to reach 23 million streams to make $30,000


    I've seen a few charts online that use that 0.0013 figure but I haven't seen any of those sites explain how they get to that figure.

    Those same charts also show Tidal paying 0.0070 cents per stream. Even with Tidal charging more per month for their subscription service than Apple I don't see how this is possible. Apple is paying a little over 70% of their revenue from subscriptions back to labels/artists. The amount an artists receives from their label per stream depends on the contracts they have signed with the label. But how can Tidal be paying over 5 times as much to artists when they at most are charging about twice the cost for the subscription?

    Apple isn't paying per stream, they are paying based on a percentage of the subscription revenue they stream. If I was to pay my $10 per month for Apple Music and I only streamed 1 song, 1 time for the month that would mean $7 went towards the rights owners (Label, artist etc...) of that single stream of that 1 song. Of course if your paying $10 a month for a streaming service you will be streaming a lot more than a single song but how are these sites coming by an exact figure per stream and what makes it possible for an artist to get so much more per stream from a service like Tidal? I could see an artist getting up to twice the amount per stream from Tidal or maybe a little more if Tidal is keeping far less than 30%. The only other way it could be a larger figure is if the labels take less of a cut through Tidal or Tidal users don't stream very often increasing the payout per stream.

    I think there is way too much guess work going into some of those figures. I'm not saying that streaming is or isn't a cash generator for artists. Just that there is far too little factual information to know for certain how much artists could potentially make.

    I also think the 0.0013 cents figure has been plucked out of thin air. Especially when it's only slightly above Spotify. Yes Spotify only has a slightly lower split of their revenue going towards content owners (70%) but a larger a share of Spotify's income is generated from advertising which brings in less than $10 per month per user.

    I would love to see a well researched article by DED outlining just how much the average artist generally makes from each of these services and have it be based on actual figures rather than imaginary numbers. But maybe those factual figures just aren't available?

    creativeonemonstrosityericthehalfbeeP-DogNCroundaboutnowpatchythepirateration albaconstangnostrathomascornchip
  • Reply 9 of 31
    lolliver said:
    With all due respect, artist payout is so close to zero, streaming on Apple Music is basically free. Only mainstream hit makers can see anything substantial when the payout is .0013 cents per song streamed. An artist would have to reach 23 million streams to make $30,000


    I've seen a few charts online that use that 0.0013 figure but I haven't seen any of those sites explain how they get to that figure.

    Those same charts also show Tidal paying 0.0070 cents per stream. Even with Tidal charging more per month for their subscription service than Apple I don't see how this is possible. Apple is paying a little over 70% of their revenue from subscriptions back to labels/artists. The amount an artists receives from their label per stream depends on the contracts they have signed with the label. But how can Tidal be paying over 5 times as much to artists when they at most are charging about twice the cost for the subscription?

    Apple isn't paying per stream, they are paying based on a percentage of the subscription revenue they stream. If I was to pay my $10 per month for Apple Music and I only streamed 1 song, 1 time for the month that would mean $7 went towards the rights owners (Label, artist etc...) of that single stream of that 1 song. Of course if your paying $10 a month for a streaming service you will be streaming a lot more than a single song but how are these sites coming by an exact figure per stream and what makes it possible for an artist to get so much more per stream from a service like Tidal? I could see an artist getting up to twice the amount per stream from Tidal or maybe a little more if Tidal is keeping far less than 30%. The only other way it could be a larger figure is if the labels take less of a cut through Tidal or Tidal users don't stream very often increasing the payout per stream.

    I think there is way too much guess work going into some of those figures. I'm not saying that streaming is or isn't a cash generator for artists. Just that there is far too little factual information to know for certain how much artists could potentially make.

    I also think the 0.0013 cents figure has been plucked out of thin air. Especially when it's only slightly above Spotify. Yes Spotify only has a slightly lower split of their revenue going towards content owners (70%) but a larger a share of Spotify's income is generated from advertising which brings in less than $10 per month per user.

    I would love to see a well researched article by DED outlining just how much the average artist generally makes from each of these services and have it be based on actual figures rather than imaginary numbers. But maybe those factual figures just aren't available?

    Thank you....I always wanted to know that in detail too.
    lolliver
  • Reply 10 of 31
    palegolaspalegolas Posts: 1,273member
    "It is built on the backs of free, stolen content and that's how they got that big," Reznor said.
    Although they probably got big this way, I don't believe it's the way YouTube is big today. I think YouTube's response is legit.
    YouTube is an open platform, where the content creators can do as they please.
    You wanna go all free content? You got it.
    You wanna upload something right now, and have it ready for distribution right now? You got it.
    You wanna stream content live, right now? You got it. No questions asked ;-)
    You wanna preroll long ads before your content, in hope of striking gold by monetizing shit? You got it.
    You wanna make a paid subscription channel? You got it (is it in beta?).
    You wanna keep everything free, and let core fans donate through Patreon? You got it.

    Apple music is great, and if they offered a similar approach to both music and video I'd be thinking about changing platforms to Apple. But right now it's just a music streaming service. It's great, but it's not an alternative to YouTube.

    argonautkissthename
  • Reply 11 of 31
    kevin kee said:
    Google can always say 'hey, we have tried to remove any copyright materials.' The problem is, they provide the platform for any sorts of illegal copies to take place instantaneously. Although they did remove them eventually, but that's not in their best interest. Monetizing data from user's click preference on said 'illegal materials' are more important, removing them come second.
    There should be a way of calculating and extracting (+ a percentage on top, as a fine) any ad revenues gained on the illegal/pirated videos uploaded onto youtube. They'd start taking it seriously if they were losing the revenue and more taken back in fines.
  • Reply 12 of 31
    misamisa Posts: 827member
    wood1208 said:
    Why Law is not punishing YouTube for participating/facilitating Piracy ? Tell me how Youtube platform different from Pirate-bay and similar P2P piracy sites that hosted stolen contents and let people share without paying to original contents owners or software creators. People upload movies, videos, songs which were ripped off from the copyrighted material and upload on to youtube to share. Contents owner should sue Google for this no matter later Google finds and deletes them. By virtue of providing such platform, Youtube/Google already participated in facilitating piracy act.

    There's a significant difference in how Youtube operates and how Cloudflare (which probably hosts 98%+ of the most illegal content out there by acting as a proxy to it)

    Youtube has a DMCA process, Cloudflare doesn't and will never take anything down no matter how illegal it is without a court order. Both hide behind different DMCA clauses for reasons not to immediately delete the content. Cloudflare's entire business model is built on trafficking piracy and child porn.

    So cry me a river music and film artists. Youtube at least presents an ability to take down the content.

    Try having your content stolen by pirates and then uploaded to 250 different russian file services that all accept Mastercard. Like THAT is theft and making money off that brazen theft. Then there are the image sharing sites like imgur that reward their users for stealing and scrubbing copyrights off content. But Imgur's business model is closer to that of Youtube than it it is the Russian piracy scene.

    If you want to see an end to piracy, all content has to be behind a paywall. ALL OF IT. Then mark all the content with who downloaded it, and when you see your content somewhere else, you know who to sue, but that is another problem... how do you sue someone in China or Russia? You can't.
    edited June 2016
  • Reply 13 of 31
    gatorguygatorguy Posts: 19,997member
    He's absolutely correct. And Google is being deceitful when they say they have signed agreements with publishers. Because of how the DMCA works, in order for an artist to get a song removed from YouTube that a "fan" has uploaded they have to send a take-down request. Content is uploaded so quickly to YouTube that this becomes an impossible task. As soon as you take down one song, 10 more have popped up. So the publishers have signed an agreement with a gun pointed at their heads because they know they will never be able to remove content from YouTube. Meanwhile, Google rakes in billions in revenue from ads presented along with all this stolen content.
    https://techcrunch.com/2014/12/08/youtube-now-tells-you-how-copyrighted-music-will-affect-your-video-before-you-upload-it/
    http://blog.songtrust.com/music-publishing-news/5-things-you-had-wrong-about-youtube-royalties/
    https://support.google.com/youtube/answer/2797370?hl=en

    Posted purely for reference for anyone interested in figuring out what's probably FUD and what isn't in some member comments. As for Reznor he has a point, but YouTube is much, much more than songs. 
    lord amhrandasanman69
  • Reply 14 of 31
    cnocbuicnocbui Posts: 3,613member
    I remember the days when people listened to a thing called radio to hear music.  This might sound unfair to the whiney Reznor, but listeners didn't pay to hear the music being played then either.   The radio stations paid a small royalty to the music companies, which passed on almost none of those fees to the artists, who then, as now, made most of their money from live performances.  These days the radio station is called Youtube and it pays royalties to the record companies, again, most artists would sell very little of that.

    Not much has really changed, except back in the days of radio, artist would generally do anything and everything in order to get their music played by radio stations and so be heard by the public.  Publicity was all and they would destroy and vandalise hotel rooms, drive cars into swimming pools, have affairs with supermodels and conspicuously consume drugs in order to garner publicity.  I never once heard of artists asking for their works to be taken off radio and to not be played.

    I don't think Youtube is stopping any artists from making a good living if they are producing works the public likes.
    singularitylord amhrandasanman69
  • Reply 15 of 31
    chabigchabig Posts: 622member
    Cnochbui, you bring up a good point. I think there is a big difference in scope, though. Radio stations music and consumers went out to buy albums. The number of radio stations was small in comparison to the number of listeners, and listeners didn't have control over a station's playlist. Today, every listener can rely on YouTube for free, unlimited, consumption, as much as they want, on their own schedule, without it leading to a sale.
    lolliverroundaboutnowration al
  • Reply 16 of 31
    MarvinMarvin Posts: 14,200moderator
    lolliver said:
    With all due respect, artist payout is so close to zero, streaming on Apple Music is basically free. Only mainstream hit makers can see anything substantial when the payout is .0013 cents per song streamed. An artist would have to reach 23 million streams to make $30,000

    I've seen a few charts online that use that 0.0013 figure but I haven't seen any of those sites explain how they get to that figure.

    The streaming companies submit accounts that give more information about the revenue:

    http://investor.pandora.com/phoenix.zhtml?c=227956&p=irol-sec
    http://www.musicbusinessworldwide.com/spotify-revenues-topped-2bn-last-year-as-losses-hit-194m/
    http://www.digitalmusicnews.com/2015/10/26/spotify-paid-me-40000-for-10-million-streams-is-that-fair/
    http://musically.com/2015/07/22/spotify-1bn-streams-every-day/

    Pandora streamed 21 billion hours (say 15 songs per hour = 315 billion songs) last year and made $1.16b revenue.
    Spotify streams 1 billion songs per day so say 365 billion and made $2.18b revenue.

    $2.18b / 365 billion songs for Spotify = $0.006 (0.6c) per song. Spotify says that's the rate they pay out:
    http://www.spotifyartists.com/spotify-explained/
    The person paid by Spotify above said he got $40k for 10 million streams = 0.4c per stream.

    $1.16b / 315 billion songs for Pandora = $0.004 (0.4c) per song.

    Some musicians are reaching 1 billion streams so at $0.004, that's $4m. That might seem like they'd make more selling standalone but the best-selling standalone sales don't go anywhere near that unit volume:

    https://en.wikipedia.org/wiki/List_of_best-selling_singles
    https://en.wikipedia.org/wiki/List_of_best-selling_albums

    With lower rates per stream though, it's going to be worse for musicians that don't have a broad appeal. They would make more by selling standalone at a higher rate per song to a smaller audience than someone with broad appeal selling at a lower rate per song to a huge audience.

    http://www.spin.com/2016/05/drakes-views-1-million-sales-new-album/

    The numbers have changed since that link was published but Drake has about 2 million standalone sales and 1 billion streams, likely similar revenue from each at around $2-4m.

    The revenue is easier to get from concerts. $50-150 per ticket for Drake with audiences in the tens of thousands could make over $1m per concert.

    http://moneynation.com/how-much-money-drake-makes-in-a-year/

    Concerts made up most of his revenue but streaming and online sales act as marketing so that people can tell if they will like the songs and they can price tickets according to demand. Apple sponsored his tour:

    http://appleinsider.com/articles/16/04/25/apple-music-to-sponsor-drakes-summer-sixteen-tour

    When it comes to Youtube, they don't need to remove uploads afterwards, they can block uploads by checking audio signatures at the time a video is uploaded. The signatures can detect distortions too. Rather than blocking the upload though, they can just gather ad revenue and pass it on to the content owner, which is what they could be doing just now but it's obviously not enough:

    http://www.musicbusinessworldwide.com/universal-contract-youtube-sources/

    Ads don't generate that much money. They make about $1 per 1000 views (0.1c per song) and ad-blockers will drive this down. The above link about Drake noted his Youtube revenue above $1m so it's probably not much worse than streaming as long as the tracks are properly checked but an added problem is people being able to easily take the songs off Youtube and play them offline so no further streams happen for those users.
    lolliverjasenj1
  • Reply 17 of 31
    I get the point to an extent. From my perspective YouTube has done a great job with what it set out to do. Allow people to share content online with others. Yes it is now an advertising machine under Alphabet or Google but it is what it is. What would be great in my opinion if someone started a service similar but instead heavily rewarded content providers with revenue sharing or something more lucrative for the content they provide.
  • Reply 18 of 31
    lolliverlolliver Posts: 314member
    Marvin said:
    The streaming companies submit accounts that give more information about the revenue:
    Thanks for the info. Seems a lot more accurate than the other figures quoted.
    edited June 2016
  • Reply 19 of 31
    MarvinMarvin Posts: 14,200moderator
    lolliver said:
    Marvin said:
    The streaming companies submit accounts that give more information about the revenue:
    Thanks for the info. Seems a lot more accurate than the other figures quoted.
    It looks like there's just some confusion between $ and c. Someone seeing $0.001 might read it as 0.001c when it's actually 0.1c. Tidal earlier in the thread is described as 0.007 cents per track but that should be dollar amount. Spotify's rate is noted as $0.007 (0.7c) on the following page with Tidal at $0.012 (1.2c):

    http://consequenceofsound.net/2015/05/so-far-tidals-royalty-payouts-nearly-double-spotifys/

    Given these low rates, another thing music providers could do is have a topup for people who don't want an ongoing streaming subscription. If you put $5 into a topup and the rates are 0.4c per listen, you'd get 1250 plays (~60 hours of music). They'd retain the playlists in the cloud permanently and you'd just be paying when you listen to tracks. That would be more cost-effective for people who listen to music less often.
  • Reply 20 of 31
    sandorsandor Posts: 497member
    YouTube as akin to a metal scrap yard.

    The majority of their business is legit & necessary.
    But when the homeless guy comes with a shopping cart full of stolen aluminum, they buy it without a second thought, for pennies on the going rate. Then sell it off at their normal market rate.

    The problem? 
    The penalties for a scrap yard buying stolen aluminum/cooper/etc are prohibitively high, so as to deter the purchase.
    Youtube has obviously decided their current way of dealing with stolen (infringing) work is the more profitable way, as the penalties are insignificant.


    ai46
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