On one hand where record labels and music companies try their best convincing users to pay for music, YouTube, one of the largest providers of free music has claimed that free music generates as much of revenue as paid music. Not only this, it has also claimed that copyright holders have seen an improvement of up to 300% in revenues from last year with YouTube’s model of free music. This has demystified copyright holder concerns over music providers.
These YouTube claims break the myth behind free and paid music up to a certain extent. For the rest, we should keep in mind that it is YouTube we are talking about. The revenues reported by YouTube are from ad clicks and ad clicks need visitors. YouTube as enough of visitors that helps it generate these statistics and also get enough returns.
YouTube executives have outlined the sources for this income. Wired reports it as,
They said the growth was due to traffic increases, particularly on mobile phones; more profitable, optimized ad formats; the Ad Word-ization of video content (through which advertisers make videos that users opt into watching); a new crop of curators who increase free music videos through blogs and social networks; more effective sales teams, particularly as part of Vevo (a joint venture between Google, major labels, and Abu Dhabi); and YouTube’s Content ID system, which allows music copyright holders to profit from infringing use of their songs.
With this claim, YouTube breaks the conventional payment model, which is based on direct payment for services. Users instead are generating revenue for record labels by clicking on YouTube ads.